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^AMO TX V/'^5?aHA 



ANDREW KLOMAN 

Out of whose: little fofgt grew the Carnegie Steel Company 



The History of the 
Carnegie Steel Company 



AN INSIDE REVIEW OF ITS HUMBLE 
ORIGIN AND IMPRESSIVE GROWTH 



By 
JAMES HOWARD BRIDGE 




. 




1 




NEW YORK : 


THE 


ALDINE BOOK 


COMPANY 




32-34 LAFAYETTE 


PLACE 




1903 





THE LIBRARY OF 
CONGRESS, 

Two Copies Received 

JUL 10 1903 

ft Copyright Entry 

CtLASsd 0^ XXc. No. 
b tf- 5 / ^ 
COPY B. 




A-i 



x<>\^* 



Copyright, 1903, by 

JAMES HOWARD BRIDGE 

Published, July, 1903 



Entered at Stationers' Hall, Loridon, Englatid 



TO RECALL THEIR FORGOTTEN SERVICES 

^iatot^ of a ^reat ^u0ine00 
i& neUicateD 
®o t\)t ^emor^ of ^ 

^he Men who Founded it^ Saved it from early 
Disaster^ and won its First Successes : 

ANDREW KLOMAN 

DAVID McCANDLESS 

WILLIAM COLEMAN 

THOMAS MORRISON CARNEGIE 

WILLIAM R. JONES 

WILLIAM P. SHINN 

DAVID A. STEWART 

HENRY M. CURRY 



PREFACE 

This book is the outcome of a magazine article undertaken 
at an editor's request. Having spent a number of years in the 
closest intimacy with one of the owners of the great steel works, 
and enjoyed exceptional opportunities of becoming acquainted 
with the men who had wrought their success, I entertained lit- 
tle doubt as to my fitness for the task. So recalling the stories 
I had heard the partners tell, and adding a few I found in the 
writings of Andrew Carnegie, I wrote my article, and found I 
had enough material left for a couple more. These also were 
written, and in due time published. 

To my surprise they brought an avalanche of dissent and 
protest. From distant Oregon and near-by Meadville, from 
Pittsburg and New York, came word from unknown corre- 
spondents that my conventional story was only a repetition of 
similar publishings, all faulty and all designed to glorify some 
individual at the expense of his associates. One letter con- 
tained an expression so vigorous that it has won a place for 
itself in this book : " They have filched their laurel wreaths from 
the tombs of the dead." Another assured me that what I had 
deemed honorable success was but the outcome of " Macchiavel- 
lian astuteness." I was told by one who had played an impor- 
tant part in the early history of the enterprise that "the bad 
faith, treachery, and chicanery that lie at the bottom of many 
great fortunes had their parallel in the history of the Carnegie 
interests." "Dear me!" sighed an unknown Pittsburg corre- 
spondent, " the humbug of greatness is so grotesque in the 
careers of those we know that it makes one wonder at the acci- 
dents which happen to men — accidents which elevate mediocrity 



vi PREFACE 

and the commonplace to Olympian heights." In other letters 
were references to " porcine proclivities," " pachyderm entities," 
*'a vainglorious medley of contradictions." 

Under this interesting stimulus I determined to go to Pitts- 
burg and stay there until I had got at the core of things 
Carnegian. My experience was at once a disappointment and 
an encouragement. With documentary proof before me I found 
that almost every man who had written a line about the events 
I was investigating had blundered; one in dates, another in 
sequence of happenings, a third in the placing of credit for in- 
ventions and improvements; and of them all I found Andrew 
Carnegie's own narrative the least trustworthy. Knowing how 
excellent is his verbal memory, it puzzled me to find him mis- 
taking his own birth-year ; claiming to have been the first in 
America to operate the Bessemer process of steel-making; to 
have originated iron railway bridges; to have been the founder 
of the business that bears his name; to have been ever on the 
alert to adopt new processes and mechanical improvements; to 
have maintained without a break the friendliest of relations with 
his partners ; to have been the principal factor in the gigantic 
growth of the business ; to have fervently tried to carry his 
high ideals concerning labor into his own works. Instead 
of this I everywhere found proof of the contrary ; and when, 
finally, I was notified that I must agree to submit my manu- 
script to the usual Carnegie revision before I could count on 
any assistance of the present officers of the company, my disillu- 
sionment was complete. 

But it made my work more interesting. To write a con- 
ventional history from the official records of the company, with 
the aid of the company's press agent and under the guidance of 
an official censor, was a thing any journalistic fledgling could 
do. To dig into the secrets of the great corporation, to expose 
its enormous profits, reveal its peculiar business methods, its 
ways of heading off competitors, its internal strife, to get its 
first annual reports and even its later balance sheets, and to do 



PREFACE vii 

all this openly and without a bribe or the betrayal of a con- 
fidence, to involve no employee in a covert act or breach of 
faith — this was a task of no small difficulty. It is for the 
reader to judge of my success. 

Thus disadvantaged, I have not hesitated to use personal 
letters and private documents as I might not otherwise' have 
done. Whenever an interesting fact has come to my knowledge, 
properly authenticated, I have used it without regard to its im- 
plications. Yet I have stated nothing that cannot be verified. 
Often I have risked being tedious in order to quote a corrobo- 
rative document. In other cases I have kept the proofs by me 
in case my accuracy should be called into question. 

From this independence has resulted a narrative more-truth- 
ful than it could otherwise have been. Had the official repre- 
sentatives of the Carnegie Steel Company revised this story, it 
is certain that many of the statements it contains would never 
have seen the light of day. More than once the company has 
accepted a large monetary loss rather than disclose its secrets 
in court. If, therefore, this book has any value it owes it to 
its frankness. While the author expects censure for some of his 
revelations, he is willing to accept it in the cause of truth. 
The conventional history of the concern, based on benevolent 
aphorisms and platitudinous maxims about thrift, industry, gen- 
ius, and super-commercial morality, has been written a hundred 
times, and will probably be written again and again. 

The Carnegie Steel Company, as will be seen from this 
narrative, is not the creation of any man, nor indeed of any set 
of men. It is a natural evolution ; and the conditions of its 
growth are of the same general character as those of the '* flower 
in the crannied wall." Andrew Carnegie has somewhere said, 
in effect : Take away all our money, our great works, ore-mines, 
and coke-ovens, but leave our organization, and in four years I 
shall have re-established myself. He might have gone a step 
further and eliminated himself and his organization ; and in less 
than four years the steel industry would have recovered from 



viii PREFACE 

the loss. This is not the popular conception of industrial evo- 
lution, which demands captains, corporals, and other heroes; 
but it accords with evolutionary conceptions in general. 

This inevitableness of industrial growth is frankly recog- 
nized by the most far-seeing but least talkative member of the 
group. " The demands of modern life," says Mr. Frick, " called 
for such works as ours ; and if we had not met the demands 
others would have done so. Even without us the steel industry 
of the country would have been just as great as it is, though 
men would have used other names in speaking of its leaders." 
This is a frank acknowledgment, from one of themselves, that 
the kings of industrialism have no divine right. 

Little is here said on the subject of the tariff. The book is 
neither a protectionist's pleading nor a free-trader's argument. 
It is simply the story of the growth of a great industry, and the 
author deems his mission fulfilled in setting forth the facts as he 
finds them, leaving the reader free to make his own deductions. 

As this is not a political tract, neither is it an ethical trea- 
tise; and the author considers it no part of his duty either to 
extenuate or accentuate the lapses from a high moral plane 
which may occasionally have been suffered by some of the in- 
dividuals whose efforts are here described. The men who were 
instrumental in building up this great business were, originally 
at least, none of them philanthropists. There was hardly a 
step in their progress which had not the impulse of unqualified 
selfishness ; and if, in the light of retrospection, some of their 
actions seem inconsistent with a book morality, it must be 
remembered that in the fight for industrial life, as in that ear- 
lier struggle for physical existence, the victory is not to the gen- 
tle and the tender-hearted, but to the others. No great business 
has yet been built on the beatitudes; and it is not all cynicism 
that condenses a negative decalogue into a positive exhortation 
to be successful — " somehow ! " 



CONTENTS 

CHAPTER I 

The Humijle Beginning 

1853-1863 : The little Kloman forge in Girty's P.un — Excellent work- 
manship of the Kloman brothers — Thomas N. Miller and Henry 
Phipps join them — Notable extension of business — Prosperity 
brought by the war — A new mill is built at Twenty-ninth Street 
— Renewed prosperity — Anthony Kloman sells out — Quarrel 
among the partners, i 

CHAPTER n 

"A Most Hazardous Enterprise" 

1863-65 : Andrew Carnegie enters as peacemaker — Some particulars of 
his life — Hi,'- efforts produce fresh discord — Makes agreement un- 
der which Miller is forced out — Thomas M, Carnegie gets an in- 
terest — Miller and Andrew Carnegie start a rival mill at Thirty- 
third Street — Its failure — Consolidation of the two mills into 
Union Iron Mills Company — Andrew Carnegie's disappointment 
— Reproaches Miller for getting him into the iron business — Calls 
It a "most hazardous enterprise ", ....... 13 

CHAPTER III 

Early Struggles and Successes 

1865 : Phipps and Carnegie go on foreign tour and leave the business 
— Its narrow escape from disaster — T. M. Carnegie saves it — Will- 
iam Coleman's helpful advice— Phipps' trials on his return — Un- 
fortunate outside venture — Andrew Carnegie's quarrel with Miller 
— His depreciation of the enterprise — Purchases Miller's stock — 
The first labor strike — Importations of foreign workmen — Inge- 
nuity of a German — He shows Kloman how to build a "Universal 
Mill" — Andrew Carnegie's resistance to innovations — " Pioneering 
don't pay "—Opposes the great slabbing-mill— Its excellent work 
— Kloraan's inventive genius — Economies of Mr. Phipps — Brings 
in John Walker, his brother-in-law — Forms company to buy 
Twenty-ninth Street mill — Wilson, Walker & Co. — Advantages 
of the change, 25 



X CONTENTS 

CHAPTER IV 

Iron Railway Bridges 

1865 : Formation of the Keystone Bridge Company — Incorporates pre- 
vious business of Piper & Shiffler — ^Andrew Carnegie's claims as 
a pioneer — His strange mistakes — Character of Piper — Iron used 
in bridges a hundred years before Carnegie — Early iron railroad 
bridges — Commercial morals and early railroad management — 
Officials and outside interests— Influential backing of the Key- 
stone Bridge Company — Its early prosperity— A balance sheet — 
Recent losses, 39 

CHAPTER V 

A Rivalry of Great Furnaces 

1872 : Schemes for iron-smelting — Phipps and associates invited to join 
them — Coleman advises construction of independent furnace — 
Lucy furnace built — Enters upon long rivalry with the Isabella — 
Interesting struggle for supremacy — Remarkable achievements — 
Description of old-time methods — Great services of H. M. Curry 
— Inventor Whitwell's improvements — Valuable discovery by Mr. 
Phipps — His close trading — Disagreements of partners — Kloman's 
unfortunate venture — ^The panic of 1873 — On the brink of bank- 
ruptcy — 'Kloman leaves the firm — Record of the furnaces, . . 54 

CHAPTER VI 

Beginnings and Growth of the Steel Business 

1875 : Erroneous histories published of this event — Vanity of supposed 
founders—Filching of laurel wreaths from dead men's graves — 
Coleman the real founder — Secures option, with T. M. Carnegie, 
of the Braddock site — Gets his friends interested — The elder Car- 
negie's opposition — Sees progress of Bessemer steel in England- 
Returns enthusiastic and joins the enterprise— Helpfulness of 
Colonel Scott and Mr. J. Edgar Thomson — Curious result of strike 
at Johnstown — Captain Jones made superintendent — His remark- 
able ability — Letter exemplifying his broad views — Causes of suc- 
cess — Discrimination in freight rates — Shinn's methods of ac- 
counting — Disagreements of partners— They lead to construction 
of blast-furnaces — Wonderful records made in smelting — Also in 
converting works and rail-mill— Consternation in England, . 71 

CHAPTER VII 

Some Inside Financial History 

1875-1888 : Secrecy hitherto maintained concerning profits — No longer 
necessar}^ — First cost sheets and profits — Andrew Carnegie's en- 
thusiasm — Forty-one per cent, dividends — Carnegie's prophecy of 
enormous profits— Results even more astonishing— One hundred 



CONTENTS xi 

and forty per cent, in one year — Beneficent effects of the tariff — 
A golden stream of dividends— ^irst published statement of yearly 
profits— Where credit is due— Services of Holley, Jones, Shinn— , 
Jones' story of rivalries-^Part played by different partners — Mc- 
Candless. T. M. Carnegie, Stewart, Andrew Carnegie— How the 
advertising was done, . . . ♦ 94 

CHAPTER Vni 

Quarrels and "Ejectures" 

Internal discord — Dropping out of partners- Andrew Carnepfie's am- 
bition — Interesting letter — Coleman leaves — Then Kloman— ^ 
Thomas M. Scott — Death of McCandless — Shinn's departure — Re- 
sulting lawsuit — Story of the dispute and arbitration — Scott's 
ejecture — Carnegie's "foresight " — Consolidation with Lucy Fur- 
naces — Important letters from Scott and Shinn — Cost and earnings 
of the works, , . . . . . . . . . • ii? 

CHAPTER IX 

A Glance at Processes 

General prevalence of iron ore — Primitive smelting processes — How 
modern blast-furnaces are operated — The hot-blast — Use of coke 
— How it is made — Why lime is added — The puddling process — 
Cast and wrought iron — The direct process of Bessemer steel-mak- 
ing — The Jones mixer — The converter — Brilliant pyrotechnics — 
Open-hearth steel process — Its rapid growth, , , . .136 

CHAPTER X 

The Rise and Growth of Homestead 

1879: Establishment of Amity Homestead byjohn McClure — Kloman's 
rival rail-mill — Joined by the Pittsburg Bessemer Steel Company 
—Pathetic death of Klonian — His uninterrupted influence on Car- 
negie enterprises — Excellent mill and poor management — Trouble 
with labor ; leads to disagreements in the company ; and final sale 
to the Carnegies — "Carnegie luck" — Extensions and improve- 
ments — Julian Kennedy's skill — Wonderful mechanical perfec- 
tion — Purchase of the Carrie furnaces, . . . . . .150 

CHAPTER XI 

The Incoming of Henry Clay Prick 

1882 : The enterprise attains its majority — Ill-proportioned growth — 
Lacks mental development— Frick gives coherency and definite- 
ness to plans — Gathers scattered plants into perfected organiza- 
tion—Previous attempts at consolidation — Prick's extraordinary 
career— His development of the coke industry — His great fore- 
sight — Executive and organizing genius— Henceforth the most 
imposing figure in this history, 167 



xii CONTENTS 

CHAPTER XII 
The Capture of the Duquesne Steel Works 
1889: Prick's remarkable feat of financiering — Extensive works 
bought without the outlay of a dollar ; they pay for themselves in 
a year— Story of their construction ; similar to that of Homestead 
— Splendidly equipped, badly managed— Labor troubles— Car- 
negie heads them off desirable contracts — Extraordinary methods 
of competition — Discouragement of shareholders — Prick's clever 
bargaining — Amazing success ; buys works for bond issue and 
pays bonds six times over from profits — Their later development 
—Enthusiasm of local editor, 174 

CHAPTER XIII 
Labor Contests in Theory and Practice 
So.me m.oral causes of Homestead strike — Utopianism versus business 
— The puddler's strike of 1867 — The threatened trouble of 1875 at 
Edgar Thomson — No sentimentality — Strike at Beaver Falls ; a 
frank attempt to crush the labor-union — Bad business policy — An- 
drew Carnegie's idealistic publishings — "Thou shalt not take thy 
neighbor's job" — Incident in the washerwomen's strike — Pander- 
ing to the Knights of Labor ; its effects — Strike at Edgar Thom- 
son works; and employment of Pinkertons — The coke strike of 
J 887 ; Carnegie's way of settling it — Charges of bad faith ; their 
justification — Renewed disorder in the coke regions — The troubles 
at Homestead in 1889 — Description of the hardships of the work- 
men — Carnegie's embarrassing talks for publication — His cousin 
illustrates with a parable — Unfortunate settlement at Homestead 
leads to further difficulties — The labor-unions' joy, . . . 1S4 

CHAPTER XIV 
The Homestead Battle 
1892: Andrew Carnegie's chagrin— Prepares for war — Stern meas- 
ures planned — Secret instructions to Prick — Prick tries concilia- 
tion ; its failure — Statement of the differences — Small number of 
men affected — Closing of the works — Strikers assume military 
organization ; depose municipal authorities ; other arbitrary acts 
— Sheriff powerless in presence of mob law — The company's at- 
tempt to land watchmen — An all-day battle on the river — Barbar- 
ous use of dynamite and burning oil — "No quarter to scabs" — 
Story of an eye-witness — Surrender of the Pinkerton guards ; 
brutal treatment of the wounded and defenceless — Homestead in 
a state of insurrection — The calling out of the National Guard, . 203 

CHAPTER XV 

Attempted Assassination of Mr. Prick 

Purious attack on the chairman ; a desperate struggle in the office — 

Thrice shot and repeatedly stabbed. Mr. Prick makes a fight for 

his life — He saves the assassin from summary punishment — His 



CONTENTS xiii 

magnificent clispla}- of courage — His tender thought of Mrs. Frick 
— World-wide excitement — Th» punishment of mutiny in the sol- 
diers' camp — Carnegie at beautiful Loch Rannoch ; denies himself - 
to reporters — The interference of politicians — Carnegie's cable- 
gram to Whitelaw Reid — Newspaper comment in Europe and 
America — Severe condemnation of Carnegie— Prick's unceremo- 
nious return to business 224 

CHAPTER XVI 

The Aftermath of War 

Resumption of work at Homestead under protection of militia — Sympa- 
thetic strikes at other Carnegie mills — World's interest in Home- 
stead storm-centre — Incidents of camp life and in the mills — Con- 
gressional investigations — W. T. Stead's garbled reports — The 
Knights of Labor on Carnegie idealism — "Thou shalt not take thy 
neighbor's job" — Despairing violence of the strikers — Attempts 
at wholesale poisoning of non-union men — Conviction of the crimi- 
nals — Withdrawal of the militia; renewed violence — Schwab's 
conciliatorj'^ influence — Carnegie opens another library — Poetical 
effusions in honor and condemnation — The Republican debacle — 
Anger of the protectionists against Frick and Carnegie— Some 
good results of the conflict — Carnegie's return — His repudiation of 
responsibility, and praise of Frick, 236 

CHAPTER XVII 

A Reluctant Supremacy 

1892-99 : Consolidation of Carnegie works ; effect of industrial war — 
The Union Railroad — Romantic story of acquisition of Mesaba ore- 
fields — Due to Henry W. Oliver — Carnegie's opposition ; leads to 
coldness with Frick— Interesting letters — Alliance with the Rocke- 
fellers — Carnegie's renewed opposition; his amusing prophecy — 
Free gift of many millions — Frick's railroad projects — Purchase 
of a line to Lake Erie ; its economical operation — Oliver's project 
for Lake steamers adopted— The company become self-sufficing — 
A perfect industrial unit 254 

CHAPTER XVIII 

The Workings of the Corporate Mind 

1899 : The mental evolution of an industrial organism — Workings of 
machines watched and tabulated, but no regular record kept of 
Board of Managers— Mr. Frick's changes — Weekly lunches estab- 
lished and full reports kept of deliberations — Spirit of good-fellow- 
ship supplants unfriendly rivalries — Secrecy concerning business 
discussed — Official record of such a meeting — Purchase of Bethle- 
hem machinery — Important and costly additions — New partners 
admitted ; subject to the iron-clad agreement — Steel car works 



xiv CONTENTS 

projected— Conneaut pipe works recommended — An interesting 
contract — Arbitration versus litigation — Conneaut furnaces 
planned — Various reports — The reorganization of the company, . 275 

CHAPTER XIX 

The Zenith of Prosperity 

Carnegie's attempt to sell out to English investors in 1889 ; prompted 
by reduced profits ; its failure — Great increase in gains under Mr. 
Prick's management — An amazing record — Secret figures revealed 
— How these results were reached — Rapid extensions at principal 
works — The Frick Coke Company ; the use of its credit to finance 
the Carnegie concern — Fresh attempts to sell out — Carnegie's esti- 
mates of values and future profits — Plans a reorganization ; in- 
volves retirement of Frick — Fresh overtures for purchase— The 
famous option; bonus $1, 170,000— Break in money market ; fail- 
ure of the syndicate's plans — Carnegie refuses extension of option 
— Impressive description of the company and its amazing profits 
— Schwab's enthusiasm over future prospects; rails $12 a ton — 
England out of the race — Other plans of reorganization ; failure 
of them all, « . . . 293 

CHAPTER XX 

Carnegie's Attempt to Depose Frick 

Born of a quarrel, the company reaches its final form through conten- 
tion — Causes of Carnegie's animosity — Intolerance of rivalship — 
Early effort to diminish Prick's prominence — Differences concern- 
ing price of coke — Chagrin over the syndicate's failure to complete 
purchase — Ridiculous publication by Stead — Annoyances caused 
by advertisers — The coke contract — Carnegie's insinuation — 
Prick's resentment — The matter becomes official — Entry in min- 
utes of company — Carnegie tries to win Walker to his side — 
Schwab refuses to transmit Carnegie offer — Prick's resignation — 
Carnegie not satisfied ; gives his orders to managers ; their reluc- 
tance to act — Schwab's difficult position — Frick resists attempt to 
force him to sell out ; Lovejoy and Phipps side with him— Equity 
suit instituted — Prick's pleadings and Carnegie's rejoinder — Peace 
overtures— Conference at Atlantic City, ...... 316 

CHAPTER XXI 

The Failure of the Iron-Clad 

Validity of the iron-clad agreement — Its history— Devised for control 
of debtor partners — Interest revocable — New iron-clad of 1892 — 
Phipps' energetic opposition to it ; not signed by senior partners 
— Agreement of 1897 ; signed only by Carnegie— Renewed refusal 
of Phipps to sign — Agreement lies dormant until revived to meet 
Frick case— Extraordinary ritual to make it effective — The docu- 



CONTENTS XV 

ment quoted — Schwab's compliance to Carnegie's orders; Love- 
joy's independence — Protests of_^ Phipps and Frick — Attempt 
proves abortive, 336 

CHAPTER XXII 

The Atlantic City Compromise 

The training of junior partners — Lovejoy the only one to resist ; his 
independence helps to a settlement ; draws up agreement of con- 
ciliation — The Board meets at Atlantic City ; adopts Lovejoy agree- 
ment — Final transformation of Carnegie Steel Company — Con- 
solidation with the Frick Coke Company — Enormous capitalization 
— The return of peace — The Society of Carnegie Veterans, . . 346 

CHAPTER XXIII 

The Billion-Dollar Finale 

Frick's plans for Conneaut tube works; revived by Carnegie to force 
purchase — The famous bankers' dinner — Schwab's speech ; bless- 
ings of industrial peace — Morgan impressed — Carnegie's skilful 
diplomacy — Sale to Steel Trust — Price paid — Growth of Kloman's 
little business ; from less than $5,000 to nearly $500,000,000, . 358 

APPENDIX 

Some extracts from the pleadings of Henry C. Frick in the equity 

suit 365 



THE Hig'TORY 

OF THE 

CARNEGIE STEEL COMPANY 




CHAPTER I 

THE HUMBLE BEGINNING 

IN 1858 a small forge was started at 
Girty's Run in Millvale, Duquesne 
Borough, now a part of Alle- 
' gheny. It stood on the edge 

of the straggling village, 
and a muddy road ran past 
it i along the river - bank. 
Judged by modern standards 
it was an insignificant affair, 
with a little engine and a 
wooden trip-hammer — that 
first cumbrous mechanical substitute for the sledge-hammer. 
The building was a light wooden construction, about a hundred 
feet long and seventy wide ; but even in these narrow limits 
the scanty machinery seemed at first lost. It had been 
brought from the basement of a near-by dwelling where the 
business was started five years before. In the course of time 
the vacant corners and empty spaces were gradually filled with 
axle-bars, small forgings, and iron scrap of various kinds, and 
the place took on a busy air. 

The men who owned this little shop were typical black- 
smiths, deep-chested, muscular fellows, who had grown up in the 
light of the smithy and the music of the anvil. They were 
Andrew Klowman and his brother Anton, who had come from 
I I 



2 THE HUMBLE BEGINNING 

Treves in Prussia a few years before. In time the superfluous 
"w" of their name was dropped, and Anton became Anthony. 

This little place, which its owners valued, good-will and 
stock, at ^4,800, was the beginning of one of the greatest in- 
dustrial aggregates in the world, valued and bought, forty-three 
years later, for nearly five hundred million dollars ! 

In character the Kloman brothers were very different. 
Andrew was a steady, plodding man of preternatural gravity, 
earnest in his manner and watchful of every detail of cost and 




A German trip-hammer. 

From the Americaft Manufacturer. 

profit. Anthony, although the elder, had no high sense of 
responsibility. He was careless and free with both money and 
time; and the beer-can was often raised to his perspiring face. 
Andrew preferred water, not only as costing less, but as leaving 
him in better shape for bargaining. And in little things he 
was a shrewd bargainer. He had been trained in a school 
where a pfennig — the tenth of a cent — was the unit of expendi- 
ture and a mark the equivalent of a dollar. Like the Prussian 
workmen among whom his youth had been spent, he was suspi- 
cious, and, at the outset of his career, more prone to insistence 



A THIRD INTEREST FOR $i,6oo 3 

on his own rights than solicitous about those of others. Later, 
he outgrew this ; but the trait led to great happenings. 

The workmanship of Kloman Brothers, however, was fault- 
less ; and they soon won a reputation for a reliable product. 
Their specialty was axles, which they forged out of scrap-iron, 
and sold to railroads and car-builders in and around Pittsburg. 
The peculiarity of their product was caused by alternately re- 
versing the direction of the fibres while forging the iron, which 
gave their axles a superiority soon recognized by the trade. 
The practice was original with Andrew Kloman. 

Among their clients was the Pittsburg, Fort Wayne and 
Chicago Railway, then called the Ohio and Pennsylvania, which 
had shops and offices at Allegheny. The purchasing clerk of 
this company was Thomas N. Miller, who was born in Allegheny 
in 1835 ^^^ ^^^ grown up with a group of boys who were des- 
tined to leave a deep impress upon the industry of their town. 
Miller early recognized Andrew Kloman's abilities, and fre- 
quently put business in his way by introductions and recom- 
mendations to manufacturers using axles and forgings; and a 
certain intimacy was thus established between them. 

In 1859 Kloman came to Miller, and told him that his busi- 
ness was growing so rapidly that, if he could get money to install 
a second trip-hammer, he could double his output and easily 
market it. He estimated the cost of this addition at $1,600; 
and he offered Miller a third of the profits of Kloman Brothers 
if he would put this sum into the business. As Miller was 
purchasing clerk for a company which dealt with the Kloman 
Brothers, he had some doubts about the propriety of directly 
associating himself with them ; and he so expressed himself to 
Kloman. '' But I have a young friend," he added, " who might 
represent me; and if you like I'll introduce him to you." 
Kloman consented ; and Henry Phipps was brought into the 
negotiation. " 

Henry Phipps at this time was just twenty years of age, hav- 
ing been born in Philadelphia on September 27th, 1839. His 



THE HUMBLE BEGINNING 



father was a shoemaker who had moved during Henry's child- 
hood to Allegheny City, where he set up a little shop for him- 
self in Rebecca Street. At the age of thirteen young Phipps 
was earning a dollar and a quarter a week as general utility boy 
with a jeweller named Barton, who had a small shop at the cor- 
ner of Cherry Alley and 
Liberty Avenue, Pittsburg. 
In 1856 he entered the 
office of Dilworth & Bid- 
well, who had something 
to do with iron and iron 
spikes, and were also the 
local agents of the Dupont 
Powder Company. First 
he was office boy, and later 
became bookkeeper. In a 
few years the firm was dis- 
solved, Dilworth taking 
the spike-mill and Bidwell 
the powder business ; and 
young Phipps was taken by 
the latter into partnership. He was, however, still bookkeeper 
for Dilworth & Bidwell when Miller proposed that he should 
take an interest in the Kloman forge. 

Young Phipps readily agreed to join Miller in the enterprise, 
and set out to raise his share of the ^1,600 required by Kloman. 
The problem was not easy ; and it was only temporarily solved 
when the elder Phipps agreed to mortgage his house for ^800 ; 
for, not knowing that this ^800 would grow into ^50,000,000, 
he presently regretted his offer, and showed such distress that 
his son felt obliged to release him from his promise. Finally 
it was arranged that Miller should pay the whole of the ;^ 1,600 
required by Kloman, and that Phipps should refund half of this 
out of his profits in the business. In return he was to have 
half of Miller's interest, which, for propriety's sake, was put in 




Young Phipps, trudging along the canal ban 
on his way to Kloman's. 




HENRY PHIPPS 

loman & Co. ; Kloman & Phipps ; Carnegie, Phipps 
& Co, Ltd.; The Carnegie Steel Co., Ltd, 



Plate 11. 




PROFITABLE WAR CONTRACTS 5 

the name of Phipps. In addition, Phipps was to keep the 
Kloman books. 

This arrangement proved very satisfactory to all parties ; 
and, the second trip-hammer having been installed, the business 
grew rapidly. Miller secured the Klomans the preference of 
the P'ort Wayne business, and recommended them to new firms 
building cars for the railroad, such as Whittaker & Phillips 
of Toledo, Haskell & Barker of Detroit, Jessup Kennedy & 
Co. of Chicago, Barney Parker & Co. of Dayton, and others, 
from whom the bulk of their trade was soon received. Phipps, 
with the energy which has always characterized him, walked 
three miles out to the Kloman shop after his day's work at 
Dilworth's, posted up the books, and then trudged back along 
the dark towing-path of the Pennsylvania canal to his father's 
house on Rebecca Street. And Kloman, with his sleeves rolled 
up, worked with his brother and half-a-dozen men in the forge. 

Then the war broke out, and axles, which had been selling 
for two cents a pound, jumped to twelve cents a pound. And 
when it came to filling government orders for parts of gun-car- 
riages, there was no limit to price for quick deliveries. The 
making of railway supplies dwindled; and soon the firm was 
working almost exclusively on high-priced government orders. 

Under this stress of prosperity the primitive forge in Girty's 
Run was found inadequate before the war was a year old. A 
new and larger mill was therefore decided upon, and the firm 
was reorganized. Here are the articles of partnership : 

Articles of agreement made and concluded this sixteenth 
day of November, a.d. 1861, by and between Andrew and An- 
thony Kloman, of Duquesne Borough, of the first part, and 
Henry Phipps, Jr., of Allegheny City, of the second part, all of 
Allegheny County and State of Pennsylvania, witnesseth : 

That the said parties have agreed, and by these presents do 
agree, to associate together as equal copartners in the business 
of manufacturing, selling, and vending axles, iron forgings, and 
the rerolling of scrap into iron bar, and the general work of an 
iron-mill and all things pertaining thereto. 



6 THE HUMBLE BEGINNING 

It is agreed that the style of the firm shall be Kloman and 
Company, of Pittsburg, Pa. 

The capital stock shall be ^80,000, to be paid in from time 
to. time as the wants of the business may demand, in equal pro- 
portion by the said parties. 

It is further agreed that a full and correct inventory shall 
be made of the machinery on hand at present in the buildings 
now occupied by Kloman and Co., of Duquesne Borough, and a 
fair valuation shall be made thereof after the removal of the 
same to the new establishment ; and in case the said copartners 
shall not be able to agree on a valuation, then the same shall be 
adjusted by arbitrators, of whom the parties of the first part 
shall choose one, the party of the second part one, and the two 
so chosen shall select a third ; and the valuation arrived at shall 
be binding, the amount so valued shall be allowed to the said 
Andrew and Anthony Kloman as cash invested in the new 
company, and six per cent, interest shall be allowed thereon to 
the said Andrew and Anthony Kloman, from time to time, until 
the accruing profits to the party of the second part shall equal 
his share of the excess so admitted to Andrew and Anthony 
Kloman. 

It is further agreed that all purchases made after said ap- 
praisement of Andrew and Anthony Kloman's stock shall be 
made share and share alike individually in cash advancements, 
the said Andrew Kloman, the said Anthony Kloman, and the 
said Henry Phipps each advancing one-third of all the cash 
required for the business of the firm, up to the full amount of 
the capital stock aforementioned. 

It is further agreed, and to these presents the parties do 
bind themselves, that the said Andrew and Anthony Kloman 
shall not engage in any other business whatever and shall give 
their undivided attention and time to the business of the said 
copartnership, without charge or compensation, unless when 
travelling on business of the company, when necessary travelling 
expenses shall be allowed. 

The said Henry Phipps, Jr., shall keep the books of the 
firm, or exercise a supervision over them during such evenings 
as he can devote thereto, but he shall not be required to further 
exertions in the business than such time as he can consistently 
spare from his other engagements, and he shall lend his influ- 
ence so far as he can towards forwarding the interests of said 
copartnership. 

There shall be kept during the copartnership of said firm 
full, true, and correct books of account by double entry in regu- 



ARTICLES OF PARTNERSHIP 7 

lar sets, in which shall be entered all purchases, sales, accounts, 
and other transactions, and the s^me shall be neatly kept and 
posted by the party of the second part, or by his direction, and 
shall be open at all times to the inspection of the copartners. 

A correct and true inventory shall be made and entered in 
the Stock Book on the first day of July or January of each year, 
and the profits and loss estimated. 

No purchases or sales exceeding $1,000 shall be made by 
any one of the said copartners to any one person or firm, with- 
out due consultation and approval of all parties hereto. 

No partner nor partners shall sign any Bond, Mortgage, 
Note, or any Obligation, or make any endorsement, or assume 
any liability, written or verbal, for the benefit of any other 
party, nor shall any money be loaned from the firm without the 
written consent of all the parties hereto. 

And it is further agreed that neither of the parties hereto 
shall sell or assign his interest in said business without the 
consent of all the partners being first obtained in writing. 

Neither party shall draw out more than his share of the 
profits, and the party drawing out the largest amount shall pay 
interest at the rate of six per cent, on the excess drawn. 

It is agreed that in case of the death of any parties hereto, 
the business of the firm shall be carried on by the surviving 
partners until the first of January or July following, as the case 
may be, when an account of stock shall be taken and profits 
ascertained; and the one-third of the profits and stock, after 
allowance of capital stock paid in by each of the partners 
respectively, with interest, shall be paid over to the legal heirs 
of the deceased partner, one-third to be paid in cash and the 
remainder in equal instalments of one and two years. 

Such copartnership shall commence on the first day of Janu- 
ary, A.D. 1862, and embrace all contracts and business of the 
present firm of Kloman and Company except their debts, and it 
shall continue for and during the space of five years thereafter; 
and if the said Henry Thipps, Jr., shall see fit so to elect, he 
shall have the privilege of continuing for a further period of 
three or five years.* 

And it is further agreed that at the termination of this 
copartnership a valuation shall be had of the real and personal 
property of the firm, to be arrived at as in page one of this 
agreement, and one-third of the amount (after allowance of 
original capital with interest to each partner) shall be paid to 
the said Henry Phipps, Jr., by Andrew and Anthony Kloman 
in cash, if there be that amount of money available; if not. 



8 THE HUMBLE BEGINNING 

then so much as there is available, not less than one-third, and 
the balance in one and two years with interest. 

And it is agreed that in the event of Henry Phipps, Jr., 
retiring January ist, 1867, he hereby binds himself to execute 
and deliver to the said Andrew and Anthony Kloman a bond in 
the penal sum of $10,000, conditioned that he will not engage 
in a similar business for the space of three years from January 
1st, 1867. 

Witness the hands and seals of the parties aforesaid the 
day and year above written. 

ANDREW KLOMAN, L.S. 

ANTON KLOMAN, L.S. 

HENRY PHIPPS, JR., L.S. 

Signed, sealed, and delivered in presence of 
As to Andrew Kloman and 
Henry Phipps, Jr., 

A. LUDWIG KOETHEN. 
As to Anthony Kloman, 

CHAS. A. BURROWS. 

It is eloquent of hope and self-confidence that in the clause 
providing for the purchase of a deceased partner's interest, only 
profits are mentioned. No one entertained the possibility of 
losses; and the event justified their faith. This clause has a 
further interest as the precursor of similar provisions in later 
articles of association, finally elaborated into the so-called " iron- 
clad " agreement which became so famous in the annals of the 
Carnegie Steel Company. 

An interesting annex to this document is the inventory of 
the first Kloman forge. It shows with indisputable exactness 
the humble beginnings of the business which afterwards grew 
to such impressive proportions. It is as follows : " One frame 
building situate in Duquesne Borough; one steam-engine; two 
hammers; one furnace; sundry tools and merchandise; one 
small frame house and lot." 

The new mill was built on a large plot of ground at 
Twenty-ninth Street, Pittsburg, leased from the Denny estate 
at an annual rental of $324 for twenty years, with the right 
of renewal. It was a substantial affair, and provision was 



AN EVENTFUL QUARREL 9 

made for extensions. An inventory made after it had been a 
year and a half in operation shows that it then comprised four 
puddling-furnaces, four heating-furnaces, three boilers, one 
large steam-engine, four small engines, one steam-hammer, 
one trip-hammer, one tilt-hammxCr, one train of bar-rolls, one set 
of muck-rolls, one squeezer, three blacksmith's forges, four 
turning-lathes, one drilling-machine, one screw-cutting machine, 
one safe, shafting, pulleys and belting connected with the above 
machinery, sundry tools and merchandise, office furniture and 
fixtures. This list is dated April i6th, 1863. It tells the 
story of eighteen months of exceptional success, of progressive 
management, of the development of new lines of business, of 
earnings and profits put back into the business. Contrasted 
with the meagre resources of the little Duquesne shop, the 
Twenty-ninth Street mill, or the Iron City Forge as it was 
called, was a large and well-equipped establishment, with a 
large capacity for highly finished products worked up from the 
crudest forms. 

An idea of the great profits of a rolling-mill at this period 
may be obtained from the fact that between i860 and 1864 the 
price of rolled bar-iron advanced from $58 to $146 a ton, while 
the cost of pig-iron rose only from $22 to $59. 

It will be noticed that, in the articles of partnership just 
quoted, the Miller-Phipps interest was again put in the name 
of Henry Phipps, the original objection to Miller's open associa- 
tion with the firm being still thought valid; although it was 
a matter of remark by the Klomans that Miller, when making 
purchases for the Fort Wayne Road, drove a closer bargain 
with them than did any other of their customers. The condi- 
tion was nevertheless an unfortunate one ; and, as might have 
been expected, it presently gave rise to disagreements which 
ended in a quarrel and rupture. 

It is necessary to advert at some length to this quarrel be- 
cause it had an important bearing on the subsequent history 
of the enterprise. Indeed, it may be said to have completely 



lo THE HUMBLE BEGINNING 

changed the current of events, giving them a shape contem- 
plated by none at the outset, and bringing in new influences 
which in the end dominated the firm and gave it a new name. 

In June, 1862, Miller went to England for a holiday. In- 
cidentally he made large purchases of railway supplies for his 
road, which were shipped in haste in order to evade the war-tax 
of thirty-five per cent, which had just been imposed on such 
things. On his return in November he was met by Andrew 
Kloman, who made a statement to him. This meeting and the 
events which followed were so important that Miller at the 
time wrote an account of them. In this statement he says : 

" When in Europe was written to by Phipps that my pres- 
ence would be a source of relief to them (Kloman & Co.). . . . 
On my return I was soon approached by Mr. Kloman, who 
stated that the business was growing too great for him, that his 
brother was getting careless in business, and that he could not 
sleep at nights owing to his many cares, and desired to know if 
I would take an active interest in the concern and buy his 
brother out. Mr. Phipps also joined in urging me to take active 
part and buy out Anthony Kloman. I desired that if I did so 
I might be privileged to stay with the P. Ft. W. and C. RR. 
until January, 1865, but Mr. K. was very anxious that I 
should take hold as soon as possible. So I accordingly com- 
menced negotiations with Anthony, assisted by Phipps and 
Kloman, and after considerable trouble induced him to sell at 
^20,000, which was then estimated to be more than interest 
conveyed was worth by two or three thousand dollars." 

This transaction was closed on April i6th, 1863; and en- 
dorsement of it was made on the original articles of partnership, 
November i6th, 1861, quoted above. This endorsement reads 
as follows : 

Having by articles of agreement taking effect the sixteenth 
day of April, 1863, bought the interest of Anton Kloman in the 
above firm of Kloman & Co. and paid for same in hand the sum 
of twenty thousand dollars (which sum covers other interests 
also), and having done this by the assistance in influence and 
by the desire and wish of the other two partners, and at a price 



PARTNERS AT ODDS 



II 



set by Andrew Kloman, I do this the thirteenth day of June, 
1863, on the original papers handed to me by Henry Phipps, Jr., 
accept and assume the partnership of Anton Kloman to all in- 
tents and purposes, to the full and complete responsibility in- 
volved. 

Witness my hand and seal the day and year above written. 



THOMAS N. MILLER. 



Witness, 



J. II. MILLER. 



It appears, however, from Miller's written statement that 
before the actual transfer of Anthony's interest, Andrew Klo- 
man betrayed great uneasiness at the passing of control into 
the hands of his partners. To reassure him. Miller gave 
Andrew Kloman a bill of sale of half the interest just acquired 




- NOTICE 

IS HERCBY GIVBV THAT 
THOMAS N. MJLLP^R is net a member of our firm, 
nor ba« he any authority to transact bueinoau on cuj; 
acconot , 
^ Jiu20 ^B gliOMAM <fe C O. 

.OAI 



whici 
Coont 



[Photographic Reproduction.] 

from Anthony; and for a time Kloman seemed satisfied with 
this. Presently he realized that he still owned only half the 
stock of the company ; and, to the surprise of Miller and the 
alarm of Phipps, he demanded that the latter sell out to him. 
Phipps naturally demurred to such summary ejection from a 
business which was daily becoming more valuable, and which 
he had helped to build up ; and he set himself to resist the pro- 
posal. Then Kloman turned to Miller and asked him to sell ; 
and presently all three were at odds. The situation was made 
worse when Kloman discovered that Phipps, at Miller's sugges- 
tion, had sold, some time before, a share of their first interest to 
William Cowley, who had enlisted in the war and had died of 
typhus fever contracted on the field of P'redericksburg. This 



12 A HUMBLE BEGINNING 

share was now offered for sale by the young soldier's brother, 
who was his executor. It was bought back by Miller for 
$8, 500 ; but Kloman was naturally alarmed to learn that any 
part of the business which bore his name should be sold with- 
out his knowledge and in contravention of the articles of part- 
nership ; and he became further incensed against Miller. The 
strain reached fracture-point when Miller, pending a satisfac- 
tory settlement, withheld, as agent of the Fort Wayne Road, 
certain payments due from it to the Kloman firm; and Phipps, 
who had tried to remain neutral, was forced to take sides 
against his old friend Miller. 

It unfortunately happened about this time that a paragraph 
appeared in a local paper to the effect that Miller had bought 
an interest in the Kloman business, and that the style of the 
firm was to be changed to Kloman & Miller. It was probably 
one of those unauthorized statements which help to make 
up the local news of a paper; but it had the merit of truth. 
Nevertheless, by the advice of Ludwig Koethen, his lawyer, 
Kloman next day inserted an advertisement contradicting the 
statement. This appeared in the Pittsburg Evening Chronicle 
on Thursday, August 20th, 1863. 

This was the condition of affairs when the services of 
Andrew Carnegie were sought as peacemaker, with results that 
recall the ancient fable of the lawyer and the oyster. As the 
world knows, each of the litigants got a shell. 




"Each of the litigants got a shell." 



CHAPTER II 



"A MOST HAZARDOUS ENTERPRISE" 




ANDREW CARNEGIE was 

born in a little tile-roofed cottage 
in Moodie Street, Dunfermline, 
Scotland, on November 25th, 
1835. His father was a weaver 
of fine damasks, taking the weft 
and warp from merchants and 
working them up on his own 
loom at home. The introduc- 
carnegie's Birthplace. ^-^^ q£ stcam-looms and the ex- 

tension of the factory system to the linen trade put Carnegie 
and other hand-weavers out of work; and in 1848 he migrated 
to America with his wife and two sons. Making their way to 
Pittsburg, where they had relatives, Carnegie found work in the 
old Blackstock cotton-mill on Robinson Street, Allegheny City ; 
and young Andy presently joined him there as bobbin boy at 
;^i.20 a week. 

They lived in a little black frame house which stood in the 
rear of what is now 336 Rebecca Street, Allegheny — a district 
then known as Slabtown and later as Barefoot Square. The 
mother eked out her husband's earnings by taking in washing; 
and her evenings were spent in binding boots for the father of 
Henry Phipps, who lived next door but one. 

A little later, when young Andy was fourteen, he got a 
position in the bobbin-turning shop of John H. Hayes, on 
Lacock Street, at $3 a week. His duties were to fire a furnace 
in the cellar with wooden chips and to assist in running a 
small engine. Later he was made bill clerk of the factory, and 

13 



14 ''A MOST HAZARDOUS ENTERPRISE'' 

left when he was fifteen to become a messenger boy for the 
Ohio Telegraph Company. Here he learned telegraphy, be- 
came an operator, and was taken in 1854, when he. was nineteen, 
into the service of Thomas A. Scott, then superintendent of 
the western division of the Pennsylvania Railway Company. 

A year later, in September, 1855, the father died. His 
unmarked grave is in Uniondale Cemetery, Allegheny. The 
house in Rebecca Street in which he lived had been purchased 
out of his savings ; and this he left to his wife, who afterward 
sold it for $1,500. 

During the next few years young Carnegie engaged in 
various outside enterprises, and through the aid of his chief, 
Mr. Scott, often made money in them. Indeed, during this 
fruitful period of his career, before he learned that " pioneering 
don't pay," he appears to have been ready to go into any scheme 
that was brought to his notice. Besides the Woodruff Sleeping 
Car Company and the Columbia Oil Company, in both of which 
Mr. Scott gave him an interest, and which are known to have 
been the basis of his fortune, he had interests in a scheme for 
building telegraph-lines along the Pennsylvania Railroad, in a 
construction company, in a project for establishing a sutler's 
business in soldiers' camps, in a horse-trading concern in con- 
nection with General Eagan for the supply of cavalry mounts 
to the Government, in a bridge-building company, in a locomo- 
tive works, in the Duck Creek Oil Company, in the Birming- 
ham Passenger [horse-car] Railroad, the Third National Bank, 
the Pittsburg Grain Elevator, the Citizens' Passenger Railroad, 
the Dutton Oil Company, and probably other ventures forgotten 
by himself and all who knew him. By 1863, the date of his 
entry into this story, when he was twenty-eight, he had made 
quite a little money, and had been promoted to Scott's position 
as local superintendent, with offices at the Outer Depot, Pitts- 
burg. His brother Tom, some nine years his junior, was his 
assistant. 

As boys, Andrew Carnegie and Thomas N. Miller had be- 



THE ORIGINAL SIX 



15 



longed to a group which called itself The Original Six. This 
also included William Cowley, who has been mentioned, James 
R. Wilson who reappears later, James Smith, and John Phipps. 
The last-named was Henry Phipps' brother, who died in youth. 
The Original Six took walks in the country together, met at 
each other's homes, and some of them belonged to a singing- 
class conducted by Ludwig Koethen, the lawyer, choir-master, 
and assistant pastor of the Swedenborgian Church, of which 
all the Carnegies were members. Henry Phipps, being four 
years younger, belonged 
to another group, which 
included Tom Carnegie, 
Henry W. Oliver, and 
Robert Pitcairn. 

Andy, as he was 
generally called, was 
looked up to by the rest 
of the boys because he 
was older than any ex- 
cept Miller, who was 
three months his senior, 
and because of an as- 
sertiveness in his man 
ner which the boys interpreted as evidence of fitness for 
leadership. It was therefore not unnatural that both Miller 
and his young friend Phipps should submit to him their 
difficulties with Kloman. Miller, in particular, left his inter- 
ests in the hands of Carnegie, whom he held as his dearest 
friend. They had 'been the previous year in Europe together, 
where Miller had tended him in a long and dangerous illness. 
He had also tried to induce Kloman to admit Carnegie into 
their partnership; but Kloman would not hear of it. So that 
in many ways Carnegie's selection as peacemaker was appro- 
priate. It was in this strange guise that Dame Fortune, having 
already gently tapped several times at Carnegie's door, now 




Some of them belonged to a Singing-Class." 



i6 



^A MOST HAZARDOUS ENTERPRISE'' 



began a regular tattoo ; but so busy was he with his little 
schemes that many years passed before he realized the meaning 
of the noise. 

Carnegie's efforts in the interests of harmony produced 
nothing but fresh discord, until at length he decided upon the 




ANDREW CARNEGIE. 



GEORGE LAUDER. 



THOMAS N. 



Taken in fTlas^ow, 



[862. This is one of Ihe few portraits showing: Andrew Carnegie 
without a beard. 



elimination of the chief cause of trouble by ousting Miller him- 
self. This was not his avowed intention; but it was the result 
of his method of restoring peace. A new partnership agree- 
ment was drawn up, dated September ist, 1863, in which 



THE FIRST '' EJECTURE'' 17 

Miller, in lieu of four-ninths, was given one-sixth, and made 
a special partner. The capital 6i the company, now known as 
Kloman & Phipps, was to be |^6o,ooo, and was to run for six 
years and four months; but there was a clause reading: 

" But if at any time during the term aforesaid the said 
Kloman and Phipps shall desire to terminate the same as to the 
said special partner, then upon the said Kloman and Phipps 
giving to the said Thomas N. Miller sixty days' notice in writ- 
ing, and jointly signed, of their desire to that effect, the interest 
of him, the said Thomas N. Miller, shall at the end of said 
sixty days, and upon the payment to him of the capital invested 
by him and share of profits coming to him, or, in case of loss, of 
the total amount of capital still remaining due to him, retire 
from said firm, and his interest therein shall at that time wholly 
cease, and the same shall in such case accrue to the said Henry 
Phipps, Jr., as having a pre-emption right thereto, upon his 
paying in the capital for the purchase thereof." 

This agreement was signed by all the parties, Miller adding 
to his signature a protest " against the sixty days." 

In the course of a few months fresh disputes occurred, and 
Miller was served with the sixty days' notice of expulsion. 

Upon this Andrew Carnegie and his brother Thomas M. 
Carnegie both drew up written and signed statements of their 
connection with the quarrel ; and in these appears for the first 
time the fact that Tom Carnegie had been admitted into the 
partnership with money which his brother had furnished, and 
that, in addition, to quote from Andrew's statement : " In the 
event of Miller's ejecture one-half of this interest would fall to 
my brother." This was the way in which the Carnegies first 
went into the iron- business. 

In regard to the merits of the dispute itself, it is impossible 
after this lapse of time to unravel the tangled evidence. The 
suspicions and vacillation of Kloman seem to have contributed 
more than anything else to the quarrel. First he wished to be 
rid of his brother. Succeeding in this, he became desirous of 
sacrificing Phipps in order to regain the lost balance of power. 



8 



'A MOST HAZARDOUS ENTERPRISE'' 



Finally, he preferred to force out Miller, probably realizing 
that his greater financial strength made Miller more dangerous 
than Phipps, who, beyond his small salary, had nothing but his 
interest in this firm. The elder Carnegie says in his statement 
that Kloman was alarmed lest Miller and Phipps should have a 
controlling interest. " A violent quarrel ensued, and the par- 
ties were embittered toward one another. Finding Miller ob- 
stinate and determined Mr. 
Klowman eventually 
thought Phipps would be 
more desirable as a member 
of the firm; and they be- 
came friendly disposed as 
the breach widened between 
Miller and Klowman. For 
some weeks," adds Carne- 
gie, " scarcely a day passed 
that I did not see one or 
more of the parties. Hear- 
ing both sides, I was fully 
satisfied I could not estab- 
lish harmony upon the basis 
of a common partnership. 
I finally got all three to- 
gether in my office and pro- 
posed that Miller should 
have his one-third interest 
and be a silent (not special) member, Phipps and Klowman 
transacting the business. This was agreed to; but unfortu- 
nately ill feeling was created about a trifle, the result aimed 
at was lost, and the conference separated under angrier feelings 
than ever. Time only served to increase the violence of the 
quarrel." After making reference to Miller's having stopped 
the Fort Wayne payments, Carnegie continues : " But I con- 
sidered it so essential to Miller's standing that the notice 




THOMAS N, MILLER. 

First partner of Kloman and Phipps, and 
with them the founder of what afterwards 
became the Carneg-ie Steel Company. 



THE RUDIMENTARY ''IRON-CLAD'' 19 

[i.e., the advertisement denying his partnership] be recalled, as 
enemies were not wanting who began circulating slanderous 
reports about his clandestine arrangement with Klowman while 
acting as agent of the Fort Wayne Road, that I insisted upon 
Miller agreeing to anything that would reinstate him in the 
eyes of the public as a legitimate member of the Klowman 
concern." 

This was the weakness of Miller's position ; but it need not 
have been fatal to it, since he had bought Anthony Kloman's 
interest openly and in his own name. It is, indeed, impossible 
to resist the thought that Andrew Carnegie compromised his 
friend by giving serious attention to the puerile objections of 
Kloman. Some of these, as quoted by Carnegie himself, are so 
childish that one is astonished at their influence on Carnegie. 
Kloman "told me," he writes, that he "found such a [special] 
partner might possibly create trouble by insisting upon coming 
into the mill, sitting in the office, talking to the men, etc., but 
more especially he was afraid Miller might involve the firm in 
some way, or attempt to do so, for revenge, or might insist 
upon withdrawing his share of the profits at inconvenient times, 
etc. To cover these objections I suggested that Miller's good 
behavior might be secured by a clause giving the other part- 
ners the right to eject him upon notice, provided the fears 
expressed were realized. This was accepted and the present 
papers executed. " 

Having reached this extraordinary settlement with Kloman, 
Carnegie telegraphed his brother to write Miller that he must 
accept it, as otherwise "the position in which I [Andrew Car- 
negie] would be placed would be that of an agent whose acts 
were disavowed by his principal, and this would be the first 
time during my life in which I had been so placed." 

Miller therefore accepted the settlement under protest, and 
allowed his interest to be cut down to what it was before the 
purchase of Anthony's stock, and to hold even this interest 
only on sufferance of his partners. 



MILLER'S CABBAGE PATCH 21 

The incident closed for the time being, after Miller had 
accepted his expulsion and alloWbd his capital to be put in the 
name of T. M. Carnegie as trustee. Thenceforward it was a 
partnership between Kloman, Phipps, and the younger Carnegie. 

Even before the narratives of this quarrel were written — 
August 5th, 1864 — Miller had quietly paid $400 to a gardener 
named Cumming, as compensation for five acres of half-grown 
cabbages which he destroyed to make room for a rival mill at 
Thirty-third Street, Pittsburg, only four blocks from the Klo- 
man- Phipps Iron City Forges. The lease bears date of July 
1st, 1864. In this venture Andrew Carnegie, despite his 
brother's interest in the Kloman mill, had a large share. The 
list of organizers also included the names of Aaron G, Shiffler 
and J. L. Piper, who had bridge-building works near, which 
were to be supplied with iron from the new mill. There were 
also the names of John C. Matthews and Thomas Pyeatte on 
the association papers when these were published on October 
14th, 1864. Pyeatte was the bookkeeper of the concern, and 
Matthews was manager. The Cyclops Iron Company was the 
name given to the new organization ; and the mill was designed 
to be the best in Pittsburg. None of the men, however, except 
Matthews, had had any practical experience; and Matthews 
was handicapped by the ambitious plans of his associates, who, 
he used to complain, " wanted him to build a $400,000 mill on 
a $100,000 capital." The principal construction was 230 feet 
long and 80 feet wide. The building and equipment of the 
works occupied all winter; and when, in the spring, the ma- 
chinery was started, the structure was found too weak for its 
safe operation. 

Tom Carnegie had watched with grave concern his brother's 
connection with this enterprise ; and when his forebodings of 
disaster seemed about to be realized he urged Andrew to seek a 
union with the Kloman firm, so as to have the benefit of the 
German's mechanical experience and skill in remodelling the 
Cyclops Mill. Andrew, as was his wont when facing trouble, 



CARNEGIE REPROACHES HIS LUCK 23 

laughed at his brother's anxiety, but decided to follow his ad- 
vice. Overcoming Miller's objection to an alliance with his 
recent opponents, Carnegie authorized his brother to open nego- 
tiations with Kloman and Phipps for a consolidation of interests. 

In the meantime the Twenty-ninth Street mill had been 
successful beyond all expectation; and at the beginning of 1865 
its capital was raised, to keep pace with its earning power, 
from ^60,000 to ^150,000. The proposal for union with the 
discredited Cyclops concern was naturally received by Kloman 
and Phipps with coldness ; but Tom Carnegie had a persuasive 
manner, and he made liberal offers. Finally it was agreed that 
Andrew Carnegie and his group should turn over the Cyclops 
Mill and a lump sum of ^50,000, to be divided among the 
Kloman partners, in return for a little less than half of the 
shares of a new company, of which Andrew Kloman was to be 
manager. This was done; and on May ist, 1865, the Union 
Iron Mills Company was organized with a capital of half a 
million dollars. Thenceforward the two mills were known as 
the Upper and Lower Union Mills, and are so known to-day. 

Andrew Carnegie's disappointment at the outcome of this 
venture was carefully concealed at the time ; but he gave expres- 
sion to it a couple of years later in a letter full of reproaches 
which he sent to Miller. " I knew you had previously been 
wronged," he wrote, " and felt you could not forget it. I did 
what I could at the time to redress the wrong and went into the 
most hazardous enterprise I ever expect to have any connection 
with again, the building of a rival mill." And so, regarding it 
as a "most hazardous enterprise," Andrew Carnegie found 
himself fortuitously and complainingly thrust upon a road which 
was to lead him to a fortune of ^250,000,000. 

The Cyclops Mill was built on five acres of land leased from 
the Denny estate, which paid ^5,000 to recover the leases held 
by the market-gardener whose cabbages Miller dug up to make 
room for his foundations. The annual rental was ^2,000 for 
twenty-one years, with a right of renewal for a similar term at 



24 



'A MOST HAZARDOUS ENTERPRISE 



the rate which should be found current in the neighborhood. 
In 1884 the Dennys ascertained that rentals of adjoining prop- 
erty had increased fifteen-fold in twenty years. So they de- 
manded ^25,000 a year for the old-time cabbage-patch, but 
finally accepted ^12,000. Additions have been made from time 
to time to the original five-acre tract by purchase and by filling 
in the river front, until the Upper Union Mills now cover eight 
acres. 




PITTSBURG. 



The Allegheny River on the reader's left, the Monongahela on the right. They 
form the Ohio at their junction. The first Kloman forge was at the (left) end of the 
furthest bridge up the Allegheny, seen in the above illustration. The second Kloman 
forge was almost opposite, on the Pittsburg side of the river. 




HENRY PHIPPS, ANDREW CARNEGIE and 
JOHN VANDEVORT 

Taken in 1865 during a walking-tour in England 



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CHAPTER III 

EARLY STRUGGLES AND SUCCESSES 

THE war of the rebellion was draw- 
ing to a close when the consolida- 
tion of the two mills took place. 
At once the demand for govern- 
ment supplies ceased ; and it be- 
came necessary not only to find 
new markets, but to make other 
kinds of goods than the Kloman 
mill had been producing. This was no easy matter; and the 
difficulty was increased by the need for finding an outlet for 
the products of the new mill. Mr. Phipps says that business 
runs wonderfully easily when it gets in a groove. But in the 
beginning there are no grooves ; and the paths of trade for 
the Union Iron Mills had to be created. 

With the carelessness of youth Phipps gave little thought 
to the making of trade-grooves for the new company ; but hav- 
ing just received his first large sum of money, he thought 
the time had come for a great and glorious holiday. Andrew 
Carnegie shared the idea; and, accompanied by John Vande- 
vort, they went to Europe on a nine months' walking tour, 
leaving Kloman in charge of the Lower Mill, with Matthews, 
under his supervision, to manage the Upper Mill. Tom Car- 
negie was to help in such ways as he could. Miller, who was 
now the largest individual owner, took no active part in the 
direction of affairs; but he occasionally made the firm an 
advance of ready money. For it soon became evident to these 
young men, venturing in untried fields and with conditions of 
trade undergoing a sudden and radical change, that the finan- 

25 



26 



EARLY STRUGGLES AND SUCCESSES 



cing of their operations was going to be difificult. Recalling 
this time, Miller long afterward used to express his wonder, 
not only at their audacity, but at their luck. " It is no credit 
to any of us that we did not 'bust ' twenty times," he used to 
say. 

As the weeks grew into months the ever-increasing financial 
pressure developed in Tom Carnegie a resourcefulness which he 
himself had never suspected, 
and was a constant surprise 
to those who had known 
him only as his brother's 
assistant. He had a win- 
ning personality, and made 
friends even when asking 
a favor. His nature was 
broadly human; and he 
found a point of sympathetic 
contact in everybody he 
touched. The conviviality 
which his more austere 
brother afterwards so freely 
condemned had a positive 
monetary value during these 
trying times, when the tour- 
ists in Europe were discuss- 
ing cathedral architecture and falling into bewildered rapture 
over the beauties of the blossoming heather. If the situation 
was saved for the Union Iron Mills Company, it was due to 
Kloman's mechanical genius and Tom Carnegie's ability to 
make friends and then promptly to convert them into cash. 

Despite all this, it is doubtful if the firm had survived 
the return of the holiday-makers had it not been for the lucky 
speculation in oil which Miller had made in 1862, the returns 
from which enabled him repeatedly to come to the company's 
rescue. "A friend in need is a friend indeed," Tom would say 




'Discussing- cathedral architecture." 



COSTLY BLUNDERS 27 

to Miller by way of preface when asking for a couple of thou- 
sands to meet the wage -roll on Saturdays. 

Then Kloman had his troubles. The new mill was even 
more faulty in construction than he had supposed; and large 
sums were needed for alterations. Mr. Phipps says it had 
almost to be rebuilt. Andrew Carnegie, in his reproachful let- 
ter to Miller, says : " We had to spend at least ^30,000 on the 
Upper Mills to remedy blunders." Rarely, indeed, has a great 
enterprise been started under such hopeless conditions; and 
had it been known how hopeless they were, it is likely that the 
partners would have given up the struggle in despair and gone 
back to their bookkeeping and their telegraph instruments. 

Presently the tide turned. The railroads throughout the 
South were being rebuilt, the West was opening up, the Union 
Pacific was under way, and a general revival of the iron trade 
took place. Tom Carnegie had the benefit of the ripe experi- 
ence and solid judgment of William Coleman, a pioneer in the 
Pittsburg iron business, whose daughter he was hoping to wed. 
Under Mr. Coleman's direction the energies of the firm were 
directed into the channels which Kloman had partially known 
before the war; and the boom in railroad-building came in 
time to save the Union Mills. In addition, a new outlet for 
their product was opened through the connection which Andrew 
Carnegie had formed with the bridge-building firm of Piper & 
Shiffler, afterwards known as the Keystone Bridge Company. 
This concern now bought all its shapes and most of its struct- 
ural material from the Union Iron Mills ; and soon the altera- 
tions which Kloman made in the Upper Mills enabled him to 
roll beams large enough for bridge purposes. 

In the spring of 1866 Phipps and the elder Carnegie re- 
turned from their European trip ; and the former at once assumed 
financial management of the company, thereby taking upon him- 
self a burden which never left him for twenty years. In 
these days of mammoth financial operations we are so accus- 
tomed to see tens and even hundreds of millions raised for this. 



28 EARLY STRUGGLES AND SUCCESSES 

that, or the other purpose, that it is difficult to conceive of the 
greatest constituent company of a billion-dollar organization 
having trouble to find money to pay the wages of its workmen. 
But Phipps had years of such experiences; and more than once 
the men were obliged to accept, in lieu of wages, orders for 
groceries on a local store. An amusing circumstance is recalled 
to illustrate the chronic nature of this effort to do business 
without adequate capital. 

Mr. Phipps had an old black mare, Gypsy, which he used to 
drive from one bank to another. This old horse made the 
rounds so often that it 
would stop of its own 
accord whenever it came 
to a bank; and it would 
make a diagonal line 
across Wood Street from 
.the Citizens' National to 
the First National, and 
then on to the Third Na- 
tional, stopping before 
each bank and quietly 

"A diagonal line across Wood Street." 

waiting until Mr. Phipps 

had arranged for the day's necessities. It was impossible to 

drive this old horse in a straight line on Wood Street. 

The president of one of the old Pittsburg banks recently 
said to the present writer concerning those times : " What we 
used to admire in young Phipps was the skilful way in which 
he could keep a check in the air for two or three days." 

For a while financial conditions became easier; but before 
Mr. Phipps had grown accustomed to the change a fresh strin- 
gency arose through an unwise incursion into a new field. 

There was a pipe-works adjoining the Lower Mill, and some 
one suggested to Andrew Carnegie that it would be a good 
thing to buy this property ; it would round out their holdings, 
besides providing them with a new market for their iron. The 




CARNEGIE'S OFFER TO SELL OUT 29 

plan commended itself to the elder Carnegie, who was always 
on the alert for new uses for the product of the mill; but Tom, 
who often served as a balance-wheel to his brother's over-san- 
guine temperament, and who, moreover, had had some personal 
experience of the difficulty of financing a growing business 
with a stationary capital, strongly opposed it, and showed that 
the sort of iron used in the pipe-works was not the kind the 
Union Mills produced. His opposition was nevertheless over- 
ruled. ''Tom was born tired," Andy used to say in excuse 
of what he considered his brother's lack of enterprise. So the 
pipe-works were acquired at a cost of $36,000; and soon af- 
terwards they were burned down while only partially insured. 
The loss in cash amounted to $25,000; but Mr. Phipps used 
to say that this was offset by the advantage of being rid of a 
white elephant, and by the comfort of $\ 1,000 insurance money 
in the till. 

Despite the prosperous condition of the iron trade at this 
time — the difference between pig-iron and rolled bars was still 
about $50 a ton — the loss on the pipe-works, joined to that 
resulting from the faulty construction of the Upper Mill, gave 
a very discouraging aspect to the balance-sheet of the company. 
Indeed, the scanty profits of the first three years hardly redeemed 
the enterprise from failure. While there was no actual deficit 
there was practically no profit- — none at all, in fact, if due allow- 
ance be made for depreciation of the plant ; and Andrew Car- 
negie expressed a desire to get out of the business at any 
price. Writing to Miller on September 4th, 1867, he says: 
*' I want to get out of them [the Union Iron Mills], and will do 
so before long. I^ven if I can't sell my stock it can go." And 
he adds that " $27.40 per share will be very gladly received." 
As he then held 1,600 shares, he would thus have received 
$43,840 for his entire interest. 

It is proper to state that the letter from which this quota- 
tion is made was part of an effort to get Miller to sell out of 
the Union Iron Mills Company. In the fall of 1867 the old 



30 EARLY STRUGGLES AND SUCCESSES 

quarrel had broken out afresh. Indeed, Miller, from the date 
of the consolidation, had consistently refused to sit on the 
board of directors with his former opponents; and against 
Phipps in particular he cherished grievances that hampered the 
harmonious working of the new organization. And now, to 
make matters worse, a dispute occurred between him and the 
elder Carnegie, concerning some shares in the Columbia Oil 
Company which the latter had sold him '' at cost," but which 
Miller had reason to believe had yielded Carnegie a profit of 
over three hundred per cent. The actual facts of this trans- 
action have never been ascertained; but in 1896, when Miller 
officially came into possession of the old books of the Columbia 
Oil Company, he found on the minutes the original record of 
Andrew Carnegie's purchase of some treasury stock at $2 a 
share, and a protest of other shareholders against it. As Miller 
paid Carnegie ^6. 37^^ a share for similar stock — probably not 
the same — he felt that he had been justified in his criticisms 
of Carnegie. He later sold this stock, which had cost him 
^637.50, for ^72,000, after receiving many large dividends 
which enabled him to make the loans to Tom Carnegie for the 
Union Iron Mills Company. 

Naturally this double dispute made Miller's position in the 
company untenable ; and he set out to find some one to buy him 
out. Carnegie offered to help him ; and the letters he then 
wrote show the poor regard in which he held the enterprise. 
In one he states that on his return from Europe he had *' found 
the Union Iron Mills, in my opinion, going as fast as they could 
into bankruptcy " ; and he estimates (1867) '' the mills as worth 
(or as costing exclusive of the large sums paid to repair defect- 
ive mill) ^300,000. When we pay off ^37,602.29 of debt," 
adds Carnegie, *'they will be worth that." A month later he 
writes: "Profits are not quite ^30,000" — after running two 
years and five months. " Our whole thing to-day could be re- 
placed for $250,000, and we still owe a good deal upon it. I 
could not recommend the purchaser to pay more than $27.50 for 



FOREIGN WORKMEN IMPORTED 



31 



it per share. I would like to get rid of my own at that 
figure." ^ 

The purchaser here referred to was supposed by Miller to 
be David A. Stewart; but when the sale was finally made the 
buyer proved to be Andrew Carnegie himself. The price paid 
was $32 a share for 2,300 shares. These included the holdings 
of Matthews which Miller had previously bought. In this way 
Andrew Carnegie increased his holdings to thirty-nine per cent 
of the total number of outstanding shares. 



The lack of harmony in the council-chambers of the Union 
Iron Mills was reflected at the works ; for about this time a 

strike occurred among the 
puddlers. In an unex- 
pected, and even a roman- 
tic, way this strike brought 
about changes that, in the 
end, benefited the firm to 
the extent of millions of 
dollars, and did much to 
put it in the van of pro- 
gressive iron-workers. 

At this date the Am- 
algamated Union did not 
exist ; but there were sep- 
arate trade associations for 
each class of labor. The 
puddlers were strongly or- 
ganized under the title of 
the Sons of Vulcan. By 
reason of falling prices a 
demand had been made 
on the puddlers in the Pittsburg district to accept a reduction 
of wages. This being refused, a lockout resulted; and the 
firm had its first fight with labor. It was not a very serious 




"A large number of foreigners were brought 
over." 



32 EARLY STRUGGLES AND SUCCESSES 

one, for sympathetic strikes were then unknown ; and the rest 
of the men in the mills continued to work as long as the 
material on hand lasted or fresh supplies could be had. 

During the summer of 1867 the manufacturers affected by 
the strike raised a fund and sent to Europe for workmen to 
take the places of the refractory puddlers. There being no 
contract labor law to prevent it, a large number of foreigners 
were engaged and brought over. They were of all kinds and 
many nationalities. Some Germans who could not speak Eng- 
lish were allotted to the Union Iron Mills because Andrew 
Kloman, being a German himself, could easily control and 
direct them. It is interesting to note that it was not these 
drastic measures that broke the strike ; for the increasing 
boom in the iron trade soon absorbed the labor of all, at wages 
even higher than before. 

Among the Germans sent to Kloman was one named John 
Zimmer, a bright, capable fellow, who knew not only his own 
business but that of the next man. After he had been a little 
time in the works, he described to Mr. Kloman a mill that he 
had worked on in Germany, on which it was possible to roll 
plates of various widths having well-finished rolled edges. 
Such plates were unknown in America. The mill described by 
Zimmer consisted of a pair of horizontal rolls similar to the 
ordinary plate-mill then in use, but having in addition two 
movable vertical rolls that could be opened or closed at the 
will of the operator. Mr. Kloman was at once struck with the 
value of the improvement, especially for rolling material for 
bridge orders; and with Zimmer' s aid he erected the first Ger- 
man mill in the country. This is the machine now known in 
the trade as the Universal Mill. It was capable of rolling plates 
from seven to twenty-four inches wide, and from three-six- 
teenths to two inches in thickness, with rolled edges. From 
the first day this mill was a mechanical success, and was the 
forerunner of several improved mills of the same character 
afterwards erected at the Upper Mill and at Homestead. In- 



''PIONEERING DON'T PAY 33 

deed, the great slabbing-mill which was erected at Homestead 
in 1888 was a lineal descendant of the little Zimmer mill built 
in \^6'j-6'6 at Kloman's. This slabbing-mill now turns out 
thirty thousand tons of steel slabs a month; and, as it has 
steadily increased its production from year to year, it seems 
probable that its limit has not been reached even yet. Before 
its erection the average weight of an ingot that could be used 
to make plates direct was about one ton ; whereas ten- and 
fifteen-ton ingots are now rolled down to a thickness of four to 
six inches, then cut while red-hot into the lengths needed at the 
plate-mill. 

This little idea of the German workman has been worth 
millions of dollars to the firm that imported him to take the 
place of a striker. As for Zimmer himself, his reward was a 
well-paid position as foreman of the mill he erected and of its 
improved successors. He accumulated a competence, and was 
believed to be possessed of upwards of one hundred thousand 
dollars before he died. 

Despite the vaunted progressiveness of the American manu- 
facturer, these machines, open to the inspection of anybody who 
passed through the Union Mills, were but slowly adopted by 
other firms. Even Andrew Carnegie, after twenty years' experi- 
ence of the excellencies of the German mill, in consonance 
with his dictum, " Pioneering don't pay," opposed the erection 
of the slabbing-mill at Homestead ; although he afterwards be- 
came an enthusiastic admirer of its work. The Carnegie works 
to-day have still the most perfect-running Universal mills in 
the country ; and there is not another slabbing-mill in the world 
to compare in power, size, and efficiency with that at Home- 
stead. Within five miles of Homestead, one of the largest 
plate-mills in the country is producing, from the ingots which 
it necessarily uses, not more than one-third the product of a 
similar mill at Homestead, which works up the slabs made on 
the giant descendant of the little Zimmer mill. 

In the larger sphere now open to it Kloman's inventive 
3 



34 EARLY STRUGGLES AND SUCCESSES 

genius found free scope. Even in the early days of the Lower 
Mill he perfected many devices that resulted in improved 
output and increased economies. Here he invented a machine 
for ''upsetting" the ends of eye-bars, which had previously 
been made by forging and welding. At the Upper works he 
put in a twenty-inch beam-mill, the first ever built in Pittsburg 
that was planed and fitted complete, the rough casting style 
having been the rule ; and on this were rolled the first beams 
made in Pittsburg. He also erected the first Siemens re- 
generative gas-heating furnace in Pittsburg. He invented a 
machine for straightening and bending beams, channels, etc., 
cold; and the disc-saw for cutting beams, etc., cold, was first 
introduced by him. In designing rolls for unusual shapes he 
showed a rare capacity. Indeed, his ingenuity in this line of 
work was unequalled by any master mechanic in the country, 
and made his connection with the Union Mills valuable beyond 
compute. Naturally he won the admiration of the men under 
him, who were well qualified to recognize his powers; and his 
associates reposed entire confidence in his ability, gave him a 
free hand in the works, and cordially sustained him in his pro- 
gressive methods. 

As financial director of the Union Iron Mills Company Mr. 
Phipps did not limit his duties to supervising accounts, bank- 
ing transactions, and the mere routine work of the office. He 
went into the mill and watched the men at work, studied the 
machinery, and familiarized himself with all the details of manu- 
facture. Then he wandered into other works, and, comparing 
methods and results, suggested improvements and economies in 
his own. The spirit of enterprise that sanctioned the Zimmer 
experiment led him to institute scientific tests of structural 
material ; and he was one of the first in his line of business to 
call in the aid of the chemist. He was ever seeking to get 
the cost-line of mill productions to the lowest point consistent 
with the quality required by the structural engineer. To his 
never-ceasing watchfulness are largely due the great economies 



MR. PHIPPS' INGENUITY 35 

in production which placed his firm always beyond the reach of 
competition. 

On one of his trips abroad Mr. Phipps was passing through 
a mill in Germany when he noticed that the piles made ready 
for the heating-furnace, to be used for rolling " I " beams, con- 
tained more than double the amount of scrap-iron rails used in 
Pittsburg. He quietly made a sketch of the pile, and on his re- 
turn gave orders to change the piles at the Union Iron Mills to 
correspond with his sketch. He then had the resultant product 
tested, and, finding that the economy still left the factor of 
safety unimpaired, made the change permanent. The cost of 
this trip to Europe was saved almost daily thereafter to his 
firm. 

Another great economy was effected by Mr. Phipps in 1872- 
1873. In the quiet, unobtrusive manner in which he habitually 
worked, he made a long series of observations at the two mills 
and then did a little careful figuring. After cautiously verify- 
ing his conclusions, he announced to his partners that at a cost 
of one-third the price for which he believed he could sell the 
Lower Mill, he could enlarge the Upper Mill so as to make its 
product equal to that of both. The saving in cost of manage- 
ment and in the handling of material he reckoned would exceed 
^25,000 a year, a sum equal to five per cent, on their capital. 
His partners, who had learned to trust his instinct for economies, 
offered no objection to the plan except the difficulty of finding 
a purchaser for the Lower Mill. This difficulty Mr. Phipps 
solved with his habitual originality: he got up a company to 
buy it ! At the same time he brought in a new influence which 
eventually became 6i great value to the concern. This was his 
brother-in-law, Mr. John Walker. 

At this time Mr. Walker was entirely without experience 
in the iron trade ; but he had had a good commercial training 
under his father Endowed with an extraordinary memory, he 
quickly mastered the details of his new business, and in the 
course of time he became a compendium of facts and dates, to 



ENTRY OF JOHN WALKER 37 

whom his colleagues referred for information of all kinds bear- 
ing on their business. Cautious ^in his undertakings and con- 
servative in his methods, he had the confidence of the local 
bankers; and his financial connections were invaluable to his 
firm and to Carnegie, Phipps & Co. when he afterwards became 
chairman of that concern. Of studious habits and logical cast 
of mind, he showed his independence and intellectual honesty 
by openly combatting the protectionist theory ac a time when 
this was held by his associates as the rankest treason. The 
same frank spirit was shown in all the relations of his business 
life ; and he had, in an exceptional degree, the confidence and 
even affection of his partners and others with whom he was 
associated. 

With Mr. Walker as a consenting nucleus, Mr. Phipps pro- 
ceeded with the creation of a company to buy the Lower Union 
Mill. The firm of Berry, Courtney & Wilson, which had been 
a large purchaser of iron from Mr. Phipps' company, was on the 
eve of dissolution ; and no difficulty was found in persuading its 
most active member, Mr. John T. Wilson, to join Mr. Walker. 
The firm of Wilson, Walker & Co. was thus formed; and at 
once it bought the business and patents of Berry, Courtney & 
Wilson for ^50,000. Half of this sum coming to Mr. Wilson, 
he put his $25,000 into the new company. Andrew Carnegie 
added $60,000 as a silent member of the firm ; and the rest of 
the $200,000 capital was subscribed by John Walker, Alexander 
Leggate, and Howard Morton. The two last named soon with- 
drew from the firm. The old Kloman Iron City Forge, with its 
little Zimmer mill, the four puddling-furnaces, now increased to 
fifteen, its six hea.ting-furnaces, four hamrners, and five trains 
of rolls, was now turned over to Wilson, Walker & Co., and the 
Union Iron Mills Company concentrated itself upon the Upper 
Union Mills. As makers of bar-iron, railroad-car forgings and 
plates, the firm of Wilson, Walker & Co. ran as an independent 
concern until 1886, when it once more became part of the 
Phipps organization by inclusion in the firm of Carnegie, 



38 EARLY STRUGGLES AND SUCCESSES 

Phipps & Co., Limited, at a valuation of $340,000 above 
;^87,ooo mortgage. 

In regard to the Upper Mill, even greater economies than 
those foreseen by Mr. Phipps resulted from the change described. 
When the additions were made they were prudently designed for 
heavy work ; and soon the company was rolling all sizes of beams 
up to fifteen inches for structural purposes, all kinds of channels 
up to fifteen inches, almost innumerable sizes of angles, tees, Z 
bars, and other structural shapes, and universal plates on two 
large and improved Zimmer mills, of which the enterprising 
German was placed in charge. By 1881, when the Union Iron 
Mills were taken into the consolidation of various properties 
under the name of Carnegie Brothers & Co., Limited, the origi- 
nal long building had been surrounded by nine others, some 
almost equal to it in length. They contained one eight-inch 
train of rolls, one twelve-inch train, an eighteen-inch muck-train, 
an eighteen-inch scrap-train, a rotary squeezer, all operated by 
five large horizontal engines. There were, moreover, nine 
Siemens furnaces, one Swindell furnace, twenty-one puddling- 
furnaces, two reverberatory furnaces, besides extensive ma- 
chine-shops full of costly tools. The plant was taken into the 
consolidation at a valuation of $630,000. As the Lower Mill 
was sold to Wilson, Walker & Co. for $230,000, it thus appears 
that the plant had increased in value seventy-two per cent, in 
sixteen years. 



CHAPTER IV 



IRON RAILWAY BRIDGES 




THE Keystone Bridge Company, to which ref- 
erence has been made, was formed on April 
25th, 1865, with a capital of $300,000. 
The list of organizers included the names 
of Aaron G. Shiffler, J. L. Piper, Andrew 
Carnegie, Walter Katte, and James Stewart. 
Its purpose, as stated in its prospectus, was 
" the prosecution on an extensive scale " of the business of man- 
ufacturing and erecting patent iron bridges ** for railways, canals, 
common roads, streets, &c., &c. Also wire suspension bridges, 
ornamental bridges for parks and cities, pivot and draw bridges 
for roads, canals and railways, . . . built according to plans and 
specifications, as may be desired. " 

The company is said further to have " purchased the exten- 
sive Bridge Works of Messrs. Piper and Shiffler, located in the 
Ninth Ward of the City of Pittsburgh, Pa., with the right for 
the United States to manufacture and erect the celebrated Iron 
Railway Bridges under the ' Linville & Piper ' Patents, and 
'Piper's Patent' Wooden Bridges and Roof Frames." 

The works are described as having ample facilities " for the 
extensive contracts now in progress, and will be increased as 
rapidly as found .expedient, in order to complete promptly the 
most extensive structures." 

" The officers who superintend the manufacture and erection 
of all structures " are said to be " practical men, with extensive 
and varied experience, acquired in pursuing successfully, for 
many years, the business of constructing and erecting Iron and 
Wooden Railway Bridges, Roofs and Buildings. 

39 



40 IRON RAIL WA V BRIDGES 

" These Iron Bridges have been in constant use on the Great 
Pennsylvania Central Rail Road and its dependencies and con- 
nections, for many years. The great Iron Railway Bridge over 
the Ohio River at Steubenville, Ohio, with spans varying from 
2IO feet to 320 feet was erected by this Bridge Company, in 
accordance with the prescribed plans and specifications 

" The success of the ' Linville & Piper ' Patent Bridges has 
been unprecedented; for many years they have borne without 
visible defect or deterioration, the immense traffic of the Penn- 
sylvania Central Rail Road, Philadelphia and Erie Rail Road, 
Northern Central Railway, Junction Rail Road, and others. 
Miles of wooden bridge superstructure have been replaced by 
permanent iron structures, by the superintending officers of this 
Company, without detention to the business of the roads. No 
single instance of failure, either in materials or workmanship, 
has yet been reported." 

Mr. W. H. Wilson, chief engineer of the Pennsylvania Rail- 
road, writing from Altoona on July 21st, 1865, says: 

"Messrs. J. L. Piper and A. G. Shiffler have been engaged 
for the last eight years under my personal observation, and for 
some years previously, in erecting bridges for the Pennsylvania 
Rail Road Company. The wooden bridges have generally been 
on the 'Howe ' plan ; the iron bridges have been constructed 
in the shops of the Company, from plans prepared by the Engi- 
neer Department, some of them of boiler plate, but most of 
them on the 'Pratt' plan of truss, with modifications intro- 
duced at various times. All the work of raising and completing 
these bridges has been performed by Messrs. Piper and Shiffler 
in the most satisfactory manner. It affords me pleasure to 
recommend them as unsurpassed for promptness, energy and 
skill by any builders with whom I have had business relations. " 

It thus appears that Piper and Shiffler had been extensively 
engaged in building bridges of wood and iron for at least eight 
years prior to the formation of the Keystone Bridge Company. 
Andrew Carnegie, however, in his account of the business, 
speaks as though it originated with the Keystone Bridge Com- 



42 IRON RAILWAY BRIDGES 

pany, which he represents as his personal creation. In a short 
biography which he recently published through the S. S. 
McClure Newspaper Syndicate, he says : 

" There were so many delays on railroads in those days from 
burned or broken wooden bridges that I felt the day of wooden 
bridges must end soon, just as the day of wood-burning locomo- 
tives was ended. Cast iron bridges, I thought, ought to replace 
them, so I organized a company, principally from railroad men 
I knew to make these iron bridges, and we called it the Key- 
stone Bridge Company. Development of this company required 
my time, so I resigned from the railroad service in 1867." 

Mr. Carnegie has an excellent verbal memory; but he is 
especially prone to error when recalling events. He is, in fact, 
constantly mistaking impressions for occurrences, as in this 
case. That it is his memory which is here at fault is shown by 
a further error in the same biography. Speaking of his entry 
upon the manufacture of Bessemer steel he says : 

" On my return from England [he is speaking of the year 
1868] I built at Pittsburg a plant for the Bessemer process of 
steel-making, which had not until then been operated in this 
country, and started in to make steel rails for American railroads." 

First noting that the construction of the first Carnegie Bes- 
semer steel plant was not commenced until April, 1873, and was 
not in operation until the end of August, 1875, it may be seen 
by reference to any cyclopedia that the first Bessemer steel pro- 
duced in America was made at Wyandotte, Michigan, in 1864, 
and that the first Bessemer steel rails made in America were 
rolled at the North Chicago Rolling Mill in presence of the 
American Iron and Steel Institute in May, 1865, from ingots 
made at Wyandotte. Some of these rails were laid in the track 
of one of the railroads running out of Chicago ; and were still 
in use ten years afterwards when the Carnegie firm made its 
first Bessemer steel. Even if Mr. Carnegie's recollection had 
been correct as to the date of this visit to England, it would 
still be at fault in respect to the beginnings of Bessemer steel 



PIPER'S MECHANICAL GENIUS 43 

rails in America; for there were produced no less than 7,225 
tons of such rails in America in 1868. The prosaic fact is that 
the earliest of the Carnegie steel enterprises was the eleventh 
in America instead of the first to use the Bessemer process. 

In themselves these discrepancies are of little moment. It 
is probable that not one reader in a hundred would notice them ; 
but the author deems it his duty to the exceptional reader to set 
forth the facts as he finds them.* 

The Keystone Bridge Company, then, was simply the incor- 
porated business of Messrs. Piper and Shiffler. Carnegie, 
through his official position on the railroad, had long been 
familiar with their work; and he had known Piper since 1858, 
when the latter was employed for a time in the car shops at 
Altoona, where Carnegie then lived. 

Piper was a mechanical genius who was always inventing 



* The author has taken such pains, by reference to original documents, to 
establish the dates of every salient event in the history of the Carnegie Steel 
Company, that he ventures, even at the risk of being thought unduly insistent, to 
point out a further error of fact into which Mr. Carnegie has fallen through over- 
confidence in his memory. In itself the matter is trivial ; but it may have a value 
in the determination of other questions of fact which may arise. 

In the same biography Mr. Carnegie says: " For my father, who had been 
naturalized as an American citizen in 1853, had died soon afterwards. ... At 
the age of sixteen I was the family mainstay." 

The facts, as shown by the Allegheny county records on file in the Pittsburg 
Court House, are as follows: — On September 14th, 1855, the father of Andrew 
Carnegie made a will, bequeathing a house and lot in Allegheny City to Margaret 
Carnegie, his wife. Andrew was then within ten weeks of being twenty years of 
age. This will was recorded on March 30th, 1858, when Andrew was in his 
twenty-third year. 

As regards "the family mainstay," the facts are as follows: During the 
first of young Andy's working years, his wages were $1.20 a week, or $62.40 for 
the year. At Lacock's he got $3 a week, or $156 for the year. Next he earned 
$3.50, or $182 a year. Thus, at sixteen years of age, his total earnings had 
amounted to about $400, or one -quarter as much as his father had invested in the 
little home at the time of his death. 

But the elder Carnegie did not die until Andrew had almost reached his 
twenty-first birthday ; and he worked until within a few weeks of his death. In 
the year of his father's death Andrew Carnegie's salary was $35 a month ; but he 
lived away from home and had hardly more than sufficed for his own necessities. 
Even after this his mother kept a railway lodging-house near Twenty-Eighth Street, 
Pittsburg, where Robert Pitcairn, his successor on the Pennsylvania Railroad, was 
one of her lodgers. 



44 IRON RAILWAY BRIDGES 

things. One of his patents, still remembered by his associates 
of that day, was a turn-table for locomotives ; and he afterwards 
embodied some of the ideas it contained in a drawbridge. He 
also devised an improved bridge-post which was extensively 
used; and there were other things invented in conjunction with 
Linville, who was bridge engineer for the Pennsylvania Railroad, 
and later became president of the Keystone Bridge Company. 
He was a man of impressive appearance, a physical giant, and 
earnest and convincing in manner. At the same time he was 
of singular trustfulness. One of the stories still current of Tom 
Carnegie's ready wit bears on this trait of Piper's. 

The Keystone Bridge Company enjoyed certain rebates or 
discounts from the card rates of the Union Iron Mills Com- 
pany, from which it bought most of its material. One time 
when the price of iron had risen, the discounts were omitted 
from the bill rendered to the Keystone Company, and the word 
" net " appeared in their place. '' What does that mean, Tom t " 
asked Piper as he indicated the word " net." Piper, like most 
simple characters, loved a bargain; and Tom, knowing this, 
hesitated to mention the withdrawal of discounts. So he an- 
swered with his characteristic readiness, '' Oh that .<* That's 
'nit. ' It means that there's nothing to be added ! " The reply 
satisfied Piper, and he made no objection to the payment of the 
bill. 

Shiffler, the other founder of the business, had worked with 
Piper in a contractor's gang under the firm of Stone, Quigley 
& Co. on the Pennsylvania lines prior to 1857. This was 
the period referred to by Chief Engineer Wilson, when he 
said he had known them "for some years " prior to 1857 while 
"erecting bridges for the Pennsylvania Rail Road." Here 
they got the experience which made their firm so successful, 
and qualified them for the direction of the Keystone Bridge 
Company when that was formed. But neither of them origi- 
nated the use of iron in bridges ; for this material had been so 
used from the earliest days. 



!• ■''. 

|-;;''i'i,: 



i 




46 IRON RAILWAY BRIDGES 

The first iron bridge ever attempted was at Lyons, France, 
in 1755. It was to have been an arch; but the work was aban- 
doned, after a portion of the iron had been made, because of its 
great cost. In 1777-79 the first iron bridge was built by Abra- 
ham Darby, over the Severn near Colebrookdale, in Shropshire, 
the place taking the name Ironbridge. Its form is that of an 
arch of 120-foot span and 4 5 -foot rise. The next iron bridge 
was built at Wearmouth in Devonshire. It was in the form of 
a segmental arch of no less than 236-foot span; and it cost 
^27,000. In Sunderland, also in England, a bridge was built 
in 1796, of large segments of cast iron. It was justly consid- 
ered a wonderful achievement. Affixed to it was the motto Nil 
desperandtim atispice Deo ; and Sir Lowthian Bell says that every 
traveller to the north of England considered himself bound to 
visit what then was regarded as a most daring example of me- 
tallic engineering. In France the iron foot-bridge across the 
Seine near the Louvre was built in 1803 ; and during the ensu- 
ing fifty years many other iron bridges were constructed in 
Europe. 

With these examples before them it is not surprising that 
American engineers adopted iron for railroad bridges early in 
the history of steam transportation. As early as 1841 Squire 
Whipple, called the father of American iron railroad bridges, 
patented an iron truss-bridge ; though even he was not the first 
in the field. It is said that Tom Paine built an iron truss- 
bridge. Be this as it may, there were iron bridges spanning 
the Erie canal as early as 1840; and by 1847 ^ company — the 
New York Iron Bridge Company — had been formed for the ex- 
clusive manufacture of such structures. A bridge built by this 
company on the Harlem Railroad is described in the American 
Railroad Journal for November 27th, 1847; ^^d an iron Howe 
railroad bridge was already in existence on the North Adams 
branch of the Boston and Albany Railroad, a few miles north of 
Pittsfield, in April, 1847, where it was examined by Squire 
Whipple. In 1848 Whipple built two iron bridges on the Erie 



SOME EARLY EXAMPLES 



47 



Railroad; in 1849 ^^ built two more near the Chester junction 
of the Newburgh branch of the Erie. In 1852-53 the first iron 
railroad bridge of considerable span, being 150 feet to centre 
of bearings, was erected on the Albany Northern Railroad at 
the crossing of the Erie canal between the cities of Troy and 




J. L. PIPF.R, 

Who, with Aaron G. Shiffler, founded the Keystone Bridge Works. 



Cohoes. It stood for thirty years, and was removed in good 
condition to make way for a double-track bridge. A bridge of 
the same description was built in 1854 for the Black River and 
Utica Railroad at Utica. In 1855 one was built for the same 
road at Boonville, Oneida County. During the decade between 
1850 and i860, which brings us to the time of Piper and 



48 IRON RAILWAY BRIDGES 

Shiffler, the firm of S. & J. M. Whipple alone built over a hun- 
dred iron bridges of all kinds and shapes. In 1863 the Detroit 
Iron Bridge Works was organized into a joint stock company; 
and its prospectus states that its manager had ** for some years 
previous been engaged in the construction of iron bridges for 
railways." 

Thus, so far from being the pioneer in the iron railroad 
bridge business, Mr. Carnegie occupied a position a loilg way 
down the list. When he finally did become interested with 
Piper and Shiffler it was not, as he alleges, in " cast-iron bridges. " 
When cast iron was in vogue for bridge structures in England, 
wood was used in America ; and when wood was replaced with 
iron it was wrought iron, and later Bessemer steel, that was 
used. The only parts of Piper & Shiffler's bridges that were of 
cast iron were Piper's patent posts ; and these were a very small 
part of the whole, which, of course, was of wrought iron. 

It is also worthy of mention that Andrew Carnegie's princi- 
pal interest in the Keystone Bridge Company was given to him 
in return for services rendered in its promotion. He paid no 
cash for any of his shares; but desiring to have a larger hold- 
ing than that gratuitously assigned to him, he gave his note to 
the company in payment of the increased interest, and the first 
four dividends sufficed to liquidate the debt. 

It is possible that the standards of commercial morality 
were as high forty years ago as they are to-day. Business men 
of that period aver that they were higher. It is none the less 
certain that the ethics of railroad management in early days 
were formed after other standards than those of modern times ; 
else had there been more general condemnation of the fault 
which Andrew Carnegie discovered in Miller's "clandestine 
arangement with Klowman while acting as agent of the Fort 
Wayne Road." Such arrangements, not always cla-ndestine, 
seem to have been the rule in those days , and the early history 
of the Carnegie enterprises affords many examples. Despite 



EARLY RAILROAD MORALS 49 

the fact that the principal business of the most important of 
these enterprises was the manufacture of rails, railway struct- 
ures, and railway material of various kinds, it was from the 
salaried officials of railways that much of their first financial 
support was received. Miller did not sever his connection with 
the Fort Wayne road when he built the Cyclops Mill ; nor did 
Andrew Carnegie resign from the Pennsylvania when he joined 
him. Indeed, it was not an uncommon thing for the president 
and vice-president of a railroad to own shares in a corporation 
which obtained most of its business from such road. No doubt 
the business was contracted for by faithful subordinates, and 
was honestly and properly carried out by the contracting com- 
panies; and while it is possible that no question of morals is 
involved in the dual allegiance of such important officials, mod- 
ern opinion would unhesitatingly condemn it as a breach of pro- 
priety and good taste. 

In the formation of the Keystone Bridge Company this in- 
fraction of modern standards was especially conspicuous; al- 
though the matter-of-fact way in which Mr. Carnegie speaks of 
organizing a company "principally from railroad men" shows 
that he, at least, had no idea that the propriety of such a pro- 
ceeding might be questioned. President J. Edgar Thomson, 
however, had his interest appear on the company's books in 
the name of his wife. Besides Colonel Scott, vice-president, the 
Pennsylvania Railroad officials who became stockholders in 
the Keystone Bridge Company included the chief engineer, the 
assistant general superintendent, the superintendent of motive 
power and machinery, and Andrew Carnegie, the superintend- 
ent of the Pittsburg division of the line. There were also the 
president of another road, two chief engineers, and a general 
superintendent. Carnegie says he did not resign his position 
on the Pennsylvania Railroad until 1867, two years after the 
formation of the Keystone Bridge Company ; * and Mr. Pitcairn, 

* Another error. He left the Pennsylvania Railroad in 1865, in his thirtieth 
year. 

4 



50 IRON RAIL WA V BRIDGES 

his successor on the railway, afterwards joined the Keystone 
board of directors. 

It is deserving of notice that most of these gentlemen wrote 
letters of recommendation to the Keystone Bridge Company, in 
which the work of Piper and Shiffler was spoken of in the most 
flattering terms ; and these were published by the company as 
an advertisement. Here for example are those from Mr. J. 
Edgar Thomson and Colonel Scott : 

Pennsylvania Rail Road Company 
President's Office 
Philadelphia, Sept. 25th, 1865. 
Messrs. Piper and Shiffler, who will hereafter conduct their 
business of Bridge Builders under the name of the " Keystone 
Bridge Company," have for many years been engaged, both as 
employees and contractors, in erecting bridges of wood and iron 
on the Pennsylvania Rail Road and its connections. From the 
uniform success that has attended their plans, and the character 
of the work executed, I have no hesitation in recommending 
them to the patronage of the officers of rail road companies, for 
the erection of these structures, either upon the well tested 
plans they have been building, or upon such as may be pre- 
pared for them. Their facilities at Pittsburgh for building 
bridges will enable them to execute work with dispatch. 

J. Edgar Thomson, 

President. 

Pennsylvania Rail Road Company 
Office of the Vice President 

Philadelphia, July 28th, 1865. 
The Keystone Bridge Company for several years past have 
been engaged in erecting iron and wooden bridges, &c., for the 
Pennsylvania Rail Road Company and its connecting roads. 

I have had ample opportunities for observing the character 
of their structures, and can cheerfully testify to the responsibil- 
ity and skill of the Company. I consider the iron rail road 
bridges as constructed at their extensive works, in Pittsburgh, 
Penn'a., the best that I am acquainted with. 

Thomas A. Scott, 
Vice President Penn'a. R. R. Co. 

With such powerful backing the Keystone Bridge Company 
soon became one of the most important factors in the business 



SOME GREAT STRUCTURES 



51 



of bridge-building in the country. The extent of the work it 
accomplished was officially set forth in 1883, when it was stated 
that the bridges built by it, if placed end to end, would measure 
over thirty miles in length, and that their cost exceeded 
$23,000,000. 

The most prominent of these structures, containing in each 




Copyright, 1902. 
THOMAS A. SCOTT, 

Who gave Andrew Carnegie his start and many a subsequent lift. 



case the longest span of its kind then in existence, are the fol- 
lowing! 

Steel Arch. — The Mississippi River bridge at St. Louis, 
Mo. ; one span of 520 feet and two spans of 502 feet. Double- 
track and double deck railway and highway bridge. 

Steel Truss. — The Missouri River bridge at Plattsmouth, 
Neb.; two spans of 402 feet each. Single-track railway 
bridge for the Burlington and Missouri River Railway. Also, 
the Ohio River bridge at Point Pleasant, W. Va., 3,805 



52 IRON RAILWAY BRIDGES 

feet long; channel span, 420 feet. Single-track railway bridge 
for the Ohio Central Railway. 

Iron Truss. — The Ohio River bridge at Cincinnati, O. ; chan- 
nel span, 519 feet. Single-track railway bridge for the Cincin- 
nati Southern Railway. 

Iron Swing Bridge. — One span of 472 feet, over Raritan 
Bay. Single-track railway bridge for the New York and Long 
Branch Railway. 

A description of the Keystone Bridge Works published by 
the company at this time shows that they *' are exclusively de- 
voted to the manufacture of bridge and structural material, fin- 
ished ready for erection. The shop buildings are fireproof, and 
cover more than three acres of ground, and the capital invested 
exceeds $1,000,000. The company employs over six hundred 
men at these works and over three hundred and fifty in the 
field, engaged in the erection of bridges, so that the total num- 
ber of men on its pay rolls is about one thousand. The works 
are equipped in the most comprehensive manner with special 
machines and tools of the most approved type, among which 
may be mentioned hydraulic, pneumatic and power riveting ma- 
chines, a 150-foot multiple punch, shears, planers, lathes, steam 
hammers, drilling and boring mills, rivet and bolt making ma- 
chines, and a 300-ton hydraulic testing machine. The works 
are operated day and night, being lighted by the electric light 
after dark. The company has lately made extensive and costly 
additions to its plant, designed solely for the successful and 
economical working of steel, it having become evident that this 
material, in the near future, is destined altogether to take the 
place of iron. These additions consist in a gas heating furnace 
and [Kloman's] upsetting machine for the manufacture of 
steel eye-bars, a gas annealing furnace 54 feet long, the only 
furnace of this kind so far built, and a multiple reaming 
machine." 

The growth of the plant is thus seen to have been great, 
though not phenomenal. The position of the company at the 



A FINANCIAL STATEMENT 53 

beginning of 1885 is shown in the following abstract from its 
balance sheet : 

Resources. 

Real Estate $100,650.00 

Shop Equipment account 272,267.36 

Construction account 345,942.43 

Sharpsburg and Lawrence Br. stock 1,100.00 

$719,959-79 



Available accounts $229,724.39 

Overdue account (Pt. Pleasant Br.) 152,752.61 

Doubtful accounts 2,964.48 

Amount Inventory account 299,098.33 

Cash 24,947.08 

$709,486.89 

Total Effects $1,429,446.68 

Liabilities. 

Due Maury Heirs on Mortgage $50,000 .00 

" Union Iron Mills (C. Bros. & Co) . . . 409,129.11 

" Sundry accounts 134,423.37 

Stock account $447,200.00 

Profit and Loss a/c 388,694.20 

835,894.20 



$1,429,446.68 



Fourteen years later, just before the Keystone Bridge Com- 
pany became part of the United States Steel Corporation, its 
balance sheet for 1899 showed a loss of over $67,000 on con- 
tracts. Its principal gains came from castings and rivets ; and, 
by a skilful manipulation of its "inventory adjustment," the 
statement was made to show a slight profit. 

Although one of the most talked-about branches of the Car- 
negie business, the Keystone Bridge Works was one of the least 
profitable, and, when stripped of its false character as a pioneer, 
the least interesting of them all. 



CHAPTER V 



A RIVALRY OF GREAT FURNACES 




THE Civil War, and 
the great demand for 
iron which a year or 
two later followed it, 
gave a great impulse 
to the chief industry of Pitts- 
burg ; and during the years 
866 to 1870 many schemes 
were laid to meet the great local demand 
for pig-iron. Up to that time the lack 
of ore at convenient distances had han- 
dicapped the smelting industry; but when organized transpor- 
tation made the ores of Lake Superior accessible, a more 
promising aspect was given to schemes for smelting iron in 
Pittsburg on a large scale. 

In the fall of 1870 two of these projects assumed a definite 
shape, and the owners of the Union Iron Mills were invited to 
join one of them. This was the project of a number of iron 
manufacturers, including Lewis Dalzell & Co., J. Painter & 
Sons, Graff Bennett & Co., Spang, Chalfant & Co., Henry W. 
Oliver of Oliver Brothers 81 Phillips, and William Smith, owner 
of a large pipe-foundry. At this time there were only seven 
small blast-furnaces in the Pittsburg district with a total prod- 
uct of some seventy thousand tons a year; and pig-iron was 
selling at ^40 a ton. 

The Union Iron Mills were large consumers of pig-iron, and 
the scheme was not without attractions to Phipps and his asso- 
ciates, especially when presented by the most important firms 

54 



COLEMAN'S EXCELLENT ADVICE 55 

in the business; and after consultation among themselves, the 
partners went to Mr. William Coleman for his advice. No one 
was more fitted to give the young men wise counsel, for no one 
had a closer knowledge of the iron trade or better business 
judgment. Mr. Coleman considered the matter gravely, as was 
his habit, and then unhesitatingly advised against joining the 
combination. He pointed out that if the members of the Union 
Iron Mills Company wanted to go into the manufacture of pig- 
iron, it would be better for them to build one furnace themselves 
than to own one-seventh of two furnaces which would not be 
under their control or management. This advice was accepted, 
and the decision communicated to the gentlemen named, who 
at once formed the Isabella Furnace Company, and started to 
build two furnaces. Later they added a third. 

On December ist, 1870, Messrs. Kloman, Phipps, and the 
two Carnegies organized the firm of Kloman, Carnegie & Co. ; 
and when the winter was over they began the construction of a 
blast-furnace at Fifty-first Street, Pittsburg. This was the 
first Lucy furnace, so called after the wife of Thomas M. Car- 
negie, the daughter of Mr. Coleman, as the Isabella plant was 
called after Mrs. Herron, the sister of one of the members of 
the firm of Spang, Chalfant & Co. Important departures were 
made from established usages in American blast-furnace con- 
struction, and many English ideas were utilized. The Clinton 
furnace of 1859, the two Eliza furnaces of 1861, and the two 
Superior furnaces of 1862-63 were all forty-five feet high and 
twelve feet in diameter at the boshes; and owing to the ill-suc- 
cess of the fifteen-foot furnaces first erected, the twelve-foot 
bosh continued to be the favorite dimension. The Struthers 
furnace in Ohio, however, was fifty-five feet high, with sixteen 
feet diameter of bosh ; and its large output — over sixteen hun- 
dred tons of iron in one month — made it much talked about in 
Pittsburg, especially as this result was achieved with raw coal. 
The English idea of furnaces of large capacity thus came into 
favor; and both the Lucy and Isabella furnaces were made sev- 



56 A RIVALRY OF GREAT FURNACES 

enty-five feet high, the former with twenty feet diameter of bosh, 
and the latter with eighteen, afterwards changed to twenty feet. 
A spirit of rivalry sprang up between the two concerns from 
the outset. Isabella No. i and the Lucy went into blast about 
the same time in the early summer of 1872; and each started 
out by making 50 tons of pig-iron a day, which was a fair aver- 
age at that time. Within a few weeks both furnaces increased 
their output ; and by the end of the year the Lucy had made 
13,361 tons, an average of nearly 500 tons a week, notwithstand- 
ing a chill experienced in December. The Isabella followed 
closely and produced 498 tons in a single week. The next year 
the Lucy made ^J tons in a day and 578 tons in a week. Dur- 
ing the early part of 1874 the Lucy kept ahead, and in Febru- 
ary produced 593 tons ; but by August she was overtaken by 
the Isabella's 612 tons. In October the Lucy shot ahead with 
642 tons, and by the 24th of that month the Isabella had almost 
caught up, with 651 against the Lucy's 653. On that day the 
Lucy for the first time produced over a hundred tons ; and the 
achievement was greeted with loud hurrahs at the works, and 
heard of with incredulity by the iron trade. On November 2d 
the Isabella's output for the week was 6'j2 tons, and the follow- 
ing week she broke all records with 702 tons. On December 
24th she made 1 12 tons. Next year the contest between Mana- 
ger Skelding of the Lucy and Manager Crowther of the Isabella 
was continued as fiercely as ever; and in October the former 
passed his rival with 762 tons. In the same month Isabella No. 
2 crept up with 714 tons, and the following month shot ahead 
of the Lucy with 77 1>^ tons. The 800 mark was not crossed 
until 1878, when the Lucy made 804 tons in a single week. In 
March, 1880, she made 945 tons, and this was beaten by the 
Isabella, February, 1881, with 1,000 tons. The trade gasped 
with astonishment, and editors asked : *' What will these Titans 
do next } " On March 30th the same furnace made 2 1 5 tons, 
and next day 217% tons, bringing her average for the week up 
to 1,130 tons. In April she made 1,282 tons, and in October 



58 A RIVALRY OF GREAT FURNACES 

1,438 tons, the Lucy dragging behind with an average weekly 
output of about 1,000. Mr. Kennedy then joined the struggle 
with a new furnace at Braddock and ran the Isabella very close. 
In 1883, as related elsewhere, he shot so far ahead that neither 
the Lucy nor the Isabella was in the race until he himself took 
the management of the Lucy and brought her daily output to 
over 300 tons. But even this record was beaten again and 
again by the same firm, as new furnaces were put in operation, 
and the lessons learned by earlier experience showed managers 
what to avoid and what to practise. 

An interesting account of the Lucy Furnace in 1873 was 
given in the Iron Age of that date, which is worth quoting. It 
is as follows : 

To one accustomed to the methods of blast-furnace construc- 
tion as practised east of the Allegheny Mountains, the Lucy 
Furnace possesses much interest. It may be said to embody 
the best features of the Western practise, both in construction 
and management, and will well repay a visit from any Eastern 
iron master who may find himself in Pittsburg, either on busi- 
ness or pleasure. The furnace is located on the bank of the 
Allegheny River, about four [two] and a half miles from the 
centre of the city. The location is attractive as well as con- 
venient. From the top of the stack one overlooks a little valley 
of unusual beauty on the one side, with the Isabella furnaces in 
the distance and a pretty river between ; and on the other the 
suburbs of the Iron City, overhung with its cloud of black smoke 
— not beautiful, indeed, but busy, prosperous, and progressive. 
Switches connect the stock-house and cast-house with the Alle- 
gheny Valley Railroad, which affords easy facilities of connec- 
tion with the Pittsburg market and with the termini of the vari- 
ous lines of transportation by which ores and fuel are received. 

The Lucy Furnace was built by Messrs. E. J. Bird and 
William Tate, and went into blast in May, 1872. It is seventy- 
five feet high by twenty feet diameter of bosh. Like most West- 
ern furnaces, it is an iron cylinder lined with fire-brick, with an 
independent iron gas-flue, around which winds an iron stairway, 
by means of which access is had to the top of the furnace. The 
fuel and ores are carried to the tunnel head in barrows by means 
of a pneumatic lift, from which they are run under cover of an 
iron roof to the top of the stack and dumped by hand. In its 



A KLOMAN NOVELTY 59 

external appearance the furnace is neater and more attractive 
than the stone stacks of the Easf, and in many respects more 
convenient. 

The machinery of the works is of the best quality, though 
of a very different character from that usually seen in the East. 
There are three excellent blowing engines by Messrs. Macin- 
tosh, Hemphill & Co. of Pittsburg, and four pumping engines 
to raise from the Allegheny the water needed about the furnace, 
by Messrs. Epping, Carpenter & Co., Keystone Pump Works, 
Pittsburg. The locomotive used about the works is by Messrs. 
Porter, Bell & Co. of Pittsburg. AH the machinery is in the 
best condition, being comparatively new and having only the 
most careful and intelligent management. Steam is raised by 
a battery of eight boilers, each sixty feet long by forty-three 
inches in diameter. 

The capacity of the furnace is about 550 tons a week, taking 
the average of the seasons. The ores used are mostly Lake Su- 
perior, specular and hematite. During the present season the 
furnace will have received about twenty-five thousand tons from 
the Kloman mine, the property of the company near Negaunee, 
Mich. [This is an error.] Some Iron Mountain ores have been 
smelted in the furnace; but they were found more costly than 
profitable, and their use has been abandoned. The fuel is a 
coke made from the slack of the bituminous mine near Pittsburg 
— at ovens located at Carpenter's station on the Pennsylvania 
Railroad, about nineteen miles distant. The fuel costs but 
$3.60 per ton at the furnace, and we are informed that the con- 
sumption in the stack is only about one and a half tons to the 
ton of pig-iron made. 

Among the novelties to be seen at these works is a very 
simple and practical machine for cooling slag, invented by Mr. 
Andrew Kloman, one of the proprietors. Its object is simply 
to cool the slag quickly in blocks of convenient size for removal, 
thereby saving both time and labor. It consists of an annular 
water trough, with supply and waste pipes, in which, by suitable 
appliances, a series of cinder boxes are made to rotate so that 
they may be brought successively under the slag spout. The 
boxes taper slightly toward the bottom so as to admit of the 
easy withdrawal of the slag cakes when sufficiently cool. On 
the bottom of each box is placed an iron wedge with a broad, 
flat head, upon which it stands upright, and with a hole in the 
taper end by which it may be lifted out. The slag runs around 
these wedges which stand up in the middle of the boxes and 
project for some inches above the upper crust. Around, under, 



6o A RIVALRY OF GREAT FURNACES 

and between the boxes water flows continuously, and their inner 
surfaces are kept so cool that in a few minutes the slag is suffi- 
ciently solid to be removed in carts. The transfer is effected 
by means of a small hydraulic crane. The hook at the end of 
the chain is fastened in the hole in the taper end of the wedge, 
and the cake is lifted out of the box and deposited on the floor 
of the cart, which has a square hole in its bottom to facilitate 
the removal of the wedge. The slag cake is so placed that the 
head of the wedge comes over the hole, and a smart blow with 
a hammer causes it to drop out on the ground. The cake is 
then carried off and dumped. In construction and operation 
this machine is perfectly simple, and it may be worked so rap- 
idly as to dispose of the slag as fast as it can be run from the 
spout. There are seventeen cinder boxes ; and by the time the 
last has been filled the slag cake in the first is ready to be lifted 
out and removed. The proprietors of the Lucy Furnace con- 
sider it altogether the cheapest and best method of disposing of 
the cinder they have ever tried, and we have no hesitation in 
pronouncing it the most practical device of its kind we have 
ever seen in use. 

Some months ago the furnace got a chill, and but for the in- 
genious manner in which it was cleared the company would have 
suffered a heavy loss in consequence. The following account 
of the means employed, which we take from a paper lately read 
by E. C. Pechin before the American Institute of Mining Engi- 
neers at Philadelphia, will be read with interest : '' She had been 
working well on low-grade ores of about fifty per cent., produ- 
cing daily sixty-eight to seventy-five tons. There was on stack 
five hundred tons of Republic ore — one of the purest and best 
of the Lake Superior ores, averaging over sixty-eight per cent, 
of iron — which had been procured for the purpose of making a 
trial for Bessemer iron. This was charged by itself, and Mr. 
Skelding, the founder, reports that he did not succeed in get- 
ting a single cast when it came down, before the furnace chilled 
from the hearth to the top of the bosh, some twenty-five feet. 
Every effort was made to save her, but without avail ; and the 
disagreeable duty of cleaning her out was begun. The hearth 
was dug out some five or six, or perhaps eight, feet up, when Mr. 
Skelding remarked, in the hearing of one of the proprietors, 
that he wished he had a cannon. A mortar was forthwith pro- 
cured from the arsenal, and they commenced firing shots into 
the chilled mass. A large number of shots were fired and with 
considerable success, bringing down from time to time portions 
of the chill. But by and by the mass became pasty, and the 



CURRY'S GOOD WORK 6i 

cannon balls, of which they only had three, stuck fast. Mr. 
Skelding put in a large charge t)f powder, and then, to the 
amusement of the bystanders, rammed the mortar full of cotton 
waste, and on top of this placed a lump of hard ore weighing 
about fifty pounds. This novel shot brought down the scaffold 
and cannon balls, and the furnace is again running and doing 
exceedingly well." As far as the writer knows no patent has 
been taken out for this process (for a wonder!), so that it is 
available for any furnace man who is so unfortunate as to have 
a scaffold. 

Another experiment is shortly to be tried at this furnace 
which is novel, at least in this country. It is proposed to use 
two tiers of tuyeres, one eighteen inches above the other — seven 
below and five above. There is a theory that by elevating the 
zone of fusion a larger product of superior metal would result. 
The Lucy Furnace will test this theory on a large scale and 
under the most favorable circumstances, and the result will not 
be without interest to all in the business. 

This naive description gives a better idea of the primitive 
methods of furnace practice then in vogue than could possibly 
be obtained from any modern authority. 

Much of the excellent work of the Lucy Furnace in early 
years was due to the skill and enterprising management of H. 
M. Curry, who remained an important factor in the success of 
the Carnegie enterprises until his death in 1899. Mr. Curry 
was born on January 30th, 1847, at Wilkinsburg, a suburb of 
Pittsburg, where he spent his early years. At sixteen he joined 
the army as a private, and served in the Fifth Army Corps as a 
member of Company F, i 5 5th Pennsylvania Volunteers, for three 
years, and was mustered out of service as a sergeant. He was 
slightly wounded at the battle of Five Forks, but only spent a 
few days in the hospital. His first position on returning from 
the war was with the firm of Haleman & Caughey, pig-iron 
brokers, where he attracted the attention of Mr. Phipps, who, 
towards the close of 1870, gave him a position as pay and bill 
clerk in the Upper Union Mill. In 1871 he was transferred to 
the Lucy Furnace, where he was given charge of the record 
department of furnace burdens. His simple cordiality won the 



62 



RIVALRY OF GREAT FURNACES 



devotion of the men, while his thoroughness and conscientious 
attention to duty gained the confidence of his employers ; and 
when, after two or three years, certain structural changes in the 
furnace were decided upon, Mr. Curry was put in charge of 
them. On the retirement of the first superintendent, William 
Skelding, Mr. Curry, at the urgent recommendation of Mr. 
Phipps, was put in his place, and under his management the 

Lucy Furnace won the 
records just described. 

Of course such results 
were not entirely due to 
any one man's skill. Many 
of the improvements made 
were suggested by others ; 
but Mr. Curry was so free 
from conceit that he was 
just as ready to cherish 
the ideas coming from out- 
side as he was to fondle 
his own. 

Another man to whom 
no small part of the credit 
of the improvement is due 
was Mr. Whitwell, the in- 
ventor of the famous stoves 
that bear his name. In 
1873 this gentleman came 
to Mr. Phipps, and showed him that if he would shape the bell 
of the furnace so that the contents would be thrown toward the 
sides, it would not only preserve the lining of the furnace and 
save the great cost of frequent renewals, but it would result in 
such a segregation of the contents as to make a better draught, 
with resulting increase of output. The proposition was so revo- 
lutionary that Mr. Phipps naturally hesitated to make the change ; 
and Mr. Whitwell had a glass model of the improved furnace 




'The experiment was repeated." 



A WONDERFUL RECORD 63 

made and erected in the Lucy yards. At once the beneficial 
effect of the change could be seen through the glass as the 
miniature loads of ore, lime, and coke were poured into the 
model. It was a bitterly cold day when the demonstration was 
made ; but the event was so important that the partners endured 
the icy blasts for hours, and the experiment was repeated again 
and again. All the partners conceded that it was eminently 
successful — but next day most of them were laid up with colds, 
and Andrew Carnegie did not reappear at the works for a week. 
When the change was made in the furnace the results predicted 
by Mr. Whitwell were surpassed, and again a new furnace record 
was made for the world. 

In 1877 the second Lucy furnace was built, and "blown in" 
on September 27th of that year. Its general dimensions were 
those of the first Lucy furnace. By 1878 it made a monthly 
output of 3,286 tons on a coke consumption of 2,973 pounds 
per ton of iron, and in a single week it made 821 tons. In 
twelve consecutive months the output was 33,931 tons on a coke 
consumption of 2,850 pounds, a remarkable achievement at that 
time. 

The first Isabella furnace also made a wonderful record, 
when it ran continuously from January, 1876, until May, 1880, 
making a total output of 117,575 tons of pig-iron, an average 
of 2,264 tons a month. The coke consumption averaged about 
3,000 pounds. 

The Lucy furnaces during all this time were the especial 
care of Mr. Phipps. For months he almost lived in their vicin- 
ity, and sat up with them at night when they were ailing as he 
would have watched by the sick-bed of a favorite child. As he 
had earlier watched the machinery at work at the Union Mills, 
he now attended the operation of the furnaces night and day, 
thinking, scheming, and studying them in every aspect. An 
example of the ingenuity he displayed in his never-ending quest 
of economies is here recalled. 

One of the products of the furnace was known as mill-iron. 



64 A RIVALRY OF GREAT FURNACES 

This was the iron resulting from a mixture in the furnace of 
seventy-five to eighty per cent, of Lake Superior ore and twenty 
to twenty-five per cent, of puddle-furnace cinder. The cost of 
this cinder per unit of iron was less than one-tenth the cost per 
unit of iron made of ore ; but the cinder contained more than 
three times the phosphorus that was in the same amount of ore, 
which limited the use of the cheaper mixture. Mr. Phipps 
knew that the Union Iron Mills, in common with all similar 
works, made a large amount of heating-furnace or flue cinder, 
which was considered a waste product and thrown out on the 
river- banks. He quietly had some of this cinder analyzed, and 
found it as rich in iron as the puddle-cinder. It also worked 
equally well in the furnace, and carried less than one-fifth the 
amount of phosphorus contained in the puddle-cinder. He 
therefore changed the furnace mixture to sixty per cent, of flue- 
cinder and forty per cent, of Lake Superior ore ; and, despite 
this great economy, a better pig-iron was produced than before. 
This was kept a trade secret for years, during which thousands 
of tons of flue-cinder were bought at prices much below the 
cost of puddle-cinder. Indeed, the firm for years sold its pud- 
dle-cinder through brokers at $i and $1.50 per ton, which found 
its way into the hands of a competitor, and in the same way 
bought this competitor's flue-cinder for fifty cents a ton. Nat- 
urally the Lucy Furnace was prosperous and making money 
when rival concerns, thus disadvantaged, were running behind. 
This incident, one of many that might be cited, fairly illus- 
trates the character of the services which Mr. Phipps was con- 
stantly rendering his firm ; for of course his discovery was only 
used to benefit the company. It also recalls the fact that not 
all the partners took the same broad view of their obligations 
to the common interest; for one of them, a protege and cousin 
of the Carnegies, who had recently been admitted into the 
partnership, engaged in a private speculation on the strength of 
Mr. Phipps' discovery. He bought up all the flue-cinder he 
could hear of; but, lacking a knowledge of the correct percent- 



PHIPPS, THE POCKET-NERVE 65 

ages, or being estopped by partnership obligations from making 
them known, he could find no market for his cinder heaps, and 
he made a large loss. 

Mr. Phipps acquired a reputation for close trading at this 
time which is still remembered. In buying scrap-iron he had 
to bargain with all sorts of odd characters, one of whom would 
insist in the strongest brogue that " divil a cint was left to a 
harrd wurrking man afther a thrade with Harry Phipps, bad 
cess to him ! " Another was detected in an ingenious method 
of evening things up. He had two carts shaped and painted 
exactly alike, but one weighed about five hundred pounds more 
than the other. On delivering his first load of scrap at the 
furnace he would use the light wagon, 
which was weighed both before and after 
unloading, and the difference constituted 
the net weight of scrap for which he was 
paid. On subsequent trips, however, he 
used the heavier cart, and failed to weigh 
it after unloading. The clerk, believing 
that it was the same cart as had previous- 

" Bad cess to him ! " 

ly been weighed empty, credited him every 

trip with five hundred pounds more than had been delivered. 
It was at the Lucy P'urnaces that Mr. Phipps first employed 
a chemist with excellent results. The Pennsylvania Steel Com- 
pany at Harrisburg were large buyers of Bessemer pig-iron, and 
their requirements were stated in chemical terms, the princi- 
pal one being that the metal should not contain more than ten 
hundredths of one per cent, of phosphorus ; and twenty-five 
cents a ton was deducted from the price for every increase of 
one-hundredth of one per cent. In this way it was early im- 
pressed upon Mr. Phipps, who was the pocket-nerve of the con- 
cern, that a practical chemist was a necessary member of their 
staff; and it is believed that this company was the first not 
directly connected with Bessemer steel production to benefit by 
the services of an expert chemist. 
5 




66 A RIVALRY OF GREAT FURNACES 

It is unfortunate that the disagreements of partners should 
occupy so large a place in this history; but as these invariably 
had a more or less important bearing on the subsequent devel- 
opment of the enterprise, by eliminating some members and 
elevating others, they must rank with other factors in the evolu- 
tion of this great business. This time it is the story of Klo- 
man's withdrawal from the firm; and in view of the many 
erroneous statements which have been made concerning this 
event, it is especially desirable that the facts should at last be 
set forth. 

Shortly after the construction of the Lucy Furnace was 
started Mr. Kloman was persuaded to join a group of enthu- 
siasts for the purpose of mining and smelting ore in Michigan. 
Joseph Kirkpatrick, the leader of the group, was a flighty in- 
dividual of the Colonel Sellers type, who is described by an 
acquaintance as being able to " talk the buttons off your coat. " 
The mining company was known as the Cascade Iron Company, 
and the smelting concern was called the Escanaba Furnace 
Company. None of the other Carnegie partners would have 
anything to do with the enterprise. 

The Cascade Company, having a large body of ore in sight, 
made special exertions to get a contract to supply the Lucy 
Furnace; and it is told of Kirkpatrick that, having found a 
specially rich specimen, he had it analyzed, and, on the strength 
of its high metallic contents, he undertook to supply ores ** equal 
to any Lake Superior ores, Columbia ore only excepted. " With 
this guarantee a contract was made with the Lucy Furnace 
Company; but when the Cascade mineral was worked in the 
furnace it developed only forty-five to fifty per cent, of metallic 
iron instead of sixty-two to sixty-six per cent, as had been ex- 
pected. By this time new mines in the Lake Superior region 
had developed ore bodies which approached very closely in value 
to the Columbia ore ; and, under the guarantee, the owners of 
the Lucy Furnace felt that they had a claim against the Cas- 
cade people for damages. The claim was made, and was met 



6S A RIVALRY OF GREAT FURNACES 

by denials and counter-claims ; and after some unpleasant corre- 
spondence the Carnegies entered suit for ^200,000 damages. 
Before this came into court, Jay Cooke & Co. failed and the 
panic of '73 ensued. The Cascade and Escanaba companies, 
having used up most of their funds and all of their credit — 
which was exceptionally good at the outset — found themselves 
in no position to meet panic conditions while burdened with 
this great suit. They therefore deemed it prudent to compro- 
mise with the Lucy Furnace owners for ^100,000, to be paid in 
instalments. Few payments were made under this settlement 
before both the Cascade and the Escanaba companies failed; 
and the members found themselves personally responsible for 
the companies' debts. Mr. Kloman, who had imagined the 
concerns to be limited liability companies, was a shining mark 
for the creditors, and he was pushed to the verge of bank- 
ruptcy. 

Fearing that such a catastrophe, if forced by Kloman 's credit- 
ors, would involve the other concerns with which he was con- 
nected and entail a dissolution of them, Andrew Carnegie made 
a written offer to Kloman to restore him to full partnership if 
he would make a voluntary assignment and get a judicial dis- 
charge. This Kloman agreed to do ; and a committee of the 
creditors was formed to appraise his interests, which the Carne- 
gies bought. Kloman was thus enabled to make a settlement 
of fifty cents on the dollar. 

The disaster shook the Carnegie concern to its foundations ; 
and for a time it seemed as if they all would be overwhelmed in 
a common ruin. But the high financial standing of McCand- 
less, Stewart and Scott, with whom the Carnegies had just 
made an alliance, as will be told elsewhere, and the ingenuity 
of Mr. Phipps, enabled them to weather the storm. 

The disentanglement of Kloman's affairs occupied three or 
four years, during which he worked with the Carnegies, and re- 
ceived a salary of $5,000 a year. When he was free to hold 
property again, Andrew Carnegie offered him an interest of 



KLOMAN'S WITHDRAWAL 6g 

;^ 1 00,000 in the various enterprises, to be paid for out of profits. 
This did not satisfy Kloman, who valued his interest at several 
times one hundred thousand dollars ; and he demanded com- 
plete reinstatement in all the Carnegie companies, in accordance 
with the previous understanding. As he had no binding con- 
tract — the written offer and its acceptance had carried no 
legal consideration — he was unable to enforce his demand, 
and he withdrew from the Carnegie group in bitterness and 
anger. 

The later history of the Lucy Furnaces as a separate organi- 
zation can be told in a few sentences. In June, 1881, a two- 
thirds interest was sold to Wilson, Walker & Co. ; and James 
R. Wilson of that firm, one of the Original Six of Andrew 
Carnegie's boy-friends, was made chairman of the Lucy Furnace 
Company, Ltd., which was now organized. The purpose of this 
change was to release Mr. Phipps and Mr. T. M. Carnegie from 
the close attention which they had been giving the furnaces, 
that they might concentrate their efforts on the business of the 
Edgar Thomson plant at Braddock. Mr. Wilson was in poor 
health at the time of his accession to power at the furnaces ; 
and his new duties and responsibilities aggravated his trouble. 
He died in 1883 and was succeeded by E. A. McCrum. Later 
Mr. Julian Kennedy had charge of the furnaces ; and, with the 
same skill as he has applied to all his work, he soon won back 
for the Lucy the laurels she had lost to the newer furnaces at 
Braddock. 

On January ist, 1886, the Lucy Furnaces, the Upper and 
Lower Union Mills, and the Pittsburg Bessemer plant at Home- 
stead were all brought together in one organization, Carnegie, 
Phipps & Co., Limited, of which Mr. John Walker became 
chairman. 

The complete record of these furnaces, on which the atten- 
tion of the iron-making world was riveted for many years, will 
be found on the following page. 



70 



A RIVALRY OF GREAT FURNACES 



LUCY FURNACES. 



No, I, No. 2. 

Tons per annum. Tons per annum 

1872 13.361 

1873 21,674 

1874 24,543 

1875 22,984 

1876 16,174 

1877 28,918 

1878 33.980 

1879 25.942 

1880 20,910 

1881 38.186 

1882 22,385 

1883 44.317 

1884 Rebuilding. 

1885 68,047 

1886 56,209 

1887 64,259 

1888 63,970 

1889 60,447 

1890.. 76,019 

1891 72,128 53,186 

1892 66,203 Relining. 71.289 

1893. 59,413 48,787 6 months only. 

1894 81,395 82,419 

1895 102,867 87,542 

1896 102,341 104,411 

1897.. 113,060 104,963 

1898 62,967 Relining. 61,186 Relining. 

1899 88,777 37,102 

1900 62,231 Relining. 57,895 Relining. 

1901 82.677 41,251 

1902 73,537 38,575 



6,644 
28,151 
31,668 
33,931 
30,978 
35.453 
24.235 
58,416 
47,498 
64,266 
57,099 
55,834 
70. 749 
72,155 



No iron April '91 
— Coke strike. 




Fort Pitt. 



CHAPTER VI 

BEGINNINGS AND GROWTH OF THE STEEL 

BUSINESS 

MANY accounts of the beginnings of the 
Carnegie Bessemer steel business have ap- 
peared from time to time in magazines and 
other periodicals, some unwittingly fanci- 
ful, others obviously unfair, and most of 
them contradictory. Indeed, so far as the 
author knows, the actual facts concerning this important event 
have never been correctly set forth in any of the numerous 
historical sketches of the enterprise which have been written, 
nor in the many published biographical notices of the men asso- 
ciated with it. Even the more carefully compiled books which 
occasionally have been published on the subject have contained 
more romance than fact. This is equally true of all the other 
branches of the Carnegie business. 

The reason of this ever-increasing accumulation of misstate- 
ment is not far to seek. Hitherto no documentary history of 
the constituent companies of the Carnegie Steel Company 
has been attempted. No independent effort has been made to 
go back to the beginnings of things — to trace to their source 
the tiny, separate rivulets which, later, came together and formed 
such a great and impressive stream. Having no authoritative 
data before them, early writers were led into errors and mis- 
statements of facts which have been transmitted from one gen- 
eration of historians and biographers to another, until now it is 
hardly possible for the chance investigator to disinter even an 
occasional truth from the mass of error under which it is 
buried. 

71 



72 THE STEEL BUSINESS 

Another thing has contributed to give these fictions the 
semblance of fact : they have been tacitly accepted as true by 
those who knew better. The Carnegie Company grew to such 
vast proportions as practically to dominate the steel industry of 
America ; and the honor of founding and guiding it to success 
was very flattering to the vanity of those to whom it was ascribed. 
During the later history of the concern, when the trade-grooves 
of which Mr. Phipps so aptly speaks had been made, and the 
business was running smoothly, there came into prominence a 
group of ''young geniuses," as Andrew Carnegie calls them, 
whose achievements have overshadowed those of the men who 
did the first hard work and made the grooves. Many of these 
being dead, the credit which was rightly theirs has been 
given to the living, and generally accepted without disclaimer. 
Many laurel wreaths are being proudly worn to-day which, in 
all honor, should deck the graves of Andrew Kloman, William 
Coleman, Thomas M. Carnegie, David A. Stewart, William P. 
Shinn, David McCandless, Henry M. Curry and others who 
have long since joined the silent and unprotesting majority. 

The important part which William Coleman had in the ori- 
gin of the Lucy furnaces has already been mentioned. To him 
also is due the honor of founding the Carnegie Bessemer steel 
business. 

Early in 1 871 Mr. Coleman, who had been a manufacturer 
of iron rails,* visited the various steel works throughout the 

* The first steel rails used in the United States were imported from England 
in 1862 by the firm of Philip S. Justice & Co. of Philadelphia and London, 
Mr. J. Howard Mitchell of that firm reported the transaction to the editor of Iron 
Age in 1882. Steel rails were then used to a limited extent in England; and so 
enthusiastic in their praises of these rails were the managers of the lines on which 
they were used that the firm in question endeavored to have American railroads 
make some experiments with steel. But the Philadelphia firm were looked upon 
as fanatics, if not swindlers, when they talked about steel rails to American rail- 
road managers ; and it was seldom that they could obtain the earnest attention of 
the proper officers. " The rule was," Mr. Mitchell says, " to bow us out of the 
office and end the annoyance of being talked to by a dreamer." 

In 1862, however, after many efforts in this and other directions, J. Edgar 



% 



THOMAS M. CARNEGIE 

At the age of ninctteen 



Plate IV. 




COLEMAN THE FOUNDER 73 

country — at Johnstown, Cleveland, Harrisburg, Spuyten Duy- 
vil and Troy — in order to observe the operation of the Bes- 
semer converters which had been installed at these places dur- 
ing the preceding four years. He was then sixty- five years 
old, but full of energy, and enterprising and far-sighted beyond 
most of his contemporaries. 

The first result of his observations was to secure a site for 
a steel works. In this he got his son-in-law, Thomas M. Car- 
negie, to join him; and together they obtained the option of 
purchasing a tract of one hundred and seven acres of farm land 
called Braddock's Field, being the identical site of the defeat 
of General Braddock in 1755, on the Monongahela River, a 
dozen miles above Pittsburg. Bounded on the north by the 
Pennsylvania Railroad, traversed through its centre by the Bal- 
timore and Ohio, with the Monongahela affording water trans- 
portation on its southern boundary, it was an ideal spot for the 
purpose. 

Mr. Coleman resided at this time in the old homestead of 
Judge Wilkins on Penn Avenue, Homewood ; and young Car- 
Thomson, then president of the Pennsylvania Railroad Company, was induced to 
give steel rails a trial ; and he ordered one hundred tons at $150 per ton in gold — 
equivalent at that time to something like $300 per ton in currency. But unfortu- 
nately the trial lot of rails was made of crucible steel, which proved to be very high 
in carbon, though made to resist wear. They were put in the tracks of the com- 
pany in yards and at other points where the greatest wear took place ; and during 
the following winter, which was a very severe one, many of them broke. Such a 
result might have been a crushing blow to the use of steel rails if it had happened 
under the management of a less sagacious man than Mr. Thomson. He saw, 
however, that if he could get rails that would not break, yet would endure the 
great traftic on his railroad with as little wear as this lot had shown, it would be 
extremely desirable ; and he therefore gave further orders, first for five hundred 
and then for one thousand tons, which at that time were looked upon as wonder- 
fully large orders. 

In 1867 Messrs. Philip S. Justice & Co. sold to the old Beaver Meadow Rail- 
road Company, now part of the Lehigh Valley Railroad Company, one hundred 
tons of steel rails for $162.50 per ton in gold, or about $250 per ton in currency, 
and other lots at $135 per ton gold. These rails were still in the tracks in 1883, 
and Mr. Lloyd Chamberlin. then treasurer of the Lehigh Valley road, told Mr. 
Mitchell that they were excellent rails and were still in use. Very slowly did the 
use of steel rails grow from these humble beginnings. ( Vide Iron Age, August 
i6th, 1883.) 



74 



THE STEEL BUSINESS 



negie lived in a smaller place adjoining. Coleman and his son- 
in-law used to drive to town together; and the plans of the new 
steel works were developed during these drives. Their nearest 
neighbors were David A. Stewart and his brother-in-law, John 
Scott, both railway men, the former being also president of the 
Pittsburg Locomotive Works, while the latter was a director of 
the Allegheny Valley Railroad. Mr. Stewart was also presi- 
dent of the Columbia Oil 
Company, of which Mr. 
Coleman had been one of 
the original organizers; 
but making over his stock 
to Andrew Carnegie, Mr. 
Coleman did not materially 
benefit by the fabulous div- 
idends which made Andrew 
Carnegie rich. 

On mentioning the 
scheme to his neighbors, 
whose connections with the 
railroads made their co- 
operation especially desir- 
able, Coleman readily ob- 
tained the adhesion of both 
Stewart and Scott. At the 
same time young Carnegie 
brought the project to the 
attention of his brother, who lived in New York and was 
engaged in various construction companies and similar schemes. 
The elder Carnegie strongly opposed it, and refused to con- 
nect himself with it in any way. It conflicted with his theory 
about the unprofitableness of pioneering. Tom then sought 
the co-operation of Mr. David McCandless, one of the most 
prominent merchants of Pittsburg, and vice-president of the 
Exchange National Bank. Mr. McCandless had known the 




WILLIAM COLEMAN, 

Who, with his son-in-law, Thomas M. Car- 
negie, founded the Edgar Thomson Steel 
Works. 



CARNEGIE'S BELATED ZEAL 75 

younger Carnegie since childhood through his connection with 
the Swedenborgian Church, of >vhich all the Carnegies were 
members; and being familiar with the excellent work he had 
done during the early struggles of the Union Iron Mills, he 
consented to join him and Coleman in the new venture, pro- 
vided that his friend William P. Shinn was taken into the firm 
and made treasurer of it. 

In the spring of 1872 Colonel Scott, who was ever seeking 
to put profitable things in the way of Andrew Carnegie, had 
him commissioned by President J. Edgar Thomson, of the Penn- 
sylvania Railroad, to go to Europe to market a block of the 
bonds of a new railroad which was to run to Davenport, Iowa. 
Carnegie sailed in April, and was successful in selling $6,000,- 
000 of the bonds. His aggregate commissions — for he was 
fortunate enough to get them from both sides — amounted to 
$150,000. Incidentally the loss to the purchasers of the bonds 
was $6,000,000 — every cent they put in ; and a futile effort was 
afterwards made to hold Carnegie responsible for the loss. 

During this European trip Carnegie made a study of the 
Bessemer steel situation there. In England the industry was 
firmly established; and Bessemer steel rails were being made in 
ever-increasing quantities at good prices. At Derby visitors 
were shown a double-headed Bessemer rail which had been laid 
down in 1857 — at a point on the Midland Railway where previ- 
ously iron rails had sometimes to be renewed within three 
months — and which after fifteen years' constant use was still in 
good shape. In the presence of exhibits of this kind Carnegie 
was readily convinced that Coleman's Pittsburg scheme was not 
only practicable, but likely to be extremely profitable. This 
conviction was strengthened by the prospect of an additional 
outlet for the product of the Lucy Furnace ; and on his return 
he was found to be an enthusiastic supporter of the Bessemer 
project. Indeed, he volunteered to put into the venture the 
whole of his European profits, in addition to a commission of 
$75,000 which he had made the previous October on the sale 



J6 THE STEEL BUSINESS 

of a block of Gilman bonds, also a commission won through the 
friendship of Colonel Scott. 

Andrew Carnegie had sailed on this mission in April, 1872. 
During the same month Coleman, Scott, McCandless and the 
younger Carnegie entered upon a real-estate speculation. They 
bought the Mowry homestead tract in Pittsburg and subdivided 
it into building lots. The venture resulted in a large profit, 
and left the partners in good financial shape to enter upon their 
steel enterprise. On Andrew Carnegie's return with his golden 
sheaves and his new enthusiasm, the project was at once put 
into execution. On January ist, 1873, Mr. Coleman took up 
the option on Braddock's Field for himself and associates, pay- 
ing the sum of ^59,003.30 for the entire tract, subject to a 
mortgage of ^160,000; and on the 13th of the same month the 
firm of Carnegie, McCandless & Co. was organized with a capi- 
tal of ^700,000. Coleman himself put ^100,000 into the firm, 
Messrs. Kloman, Phipps, McCandless, Scott, Stewart, Shinn, 
and the younger Carnegie each subscribed ^50,000, and An- 
drew Carnegie added ^25,000 to his European profits and put 
;^2 50,000 into the venture. For by this time his ambition to 
own the largest individual interest in all the enterprises with 
which he connected himself had become definite, although it 
was not yet the absorbing passion it became later. Thus was 
started the great enterprise which afterwards became famous as 
the Edgar Thomson Steel Works. 

In 1874 the legislature of Pennsylvania, prompted by the 
widespread ruin of the panic, passed an act authorizing the 
formation of limited liability companies ; and Kloman's failure 
having brought home to the other members of his firm the 
danger of partnership agreements, they took advantage of the 
new law, and on October 12th, 1874, the firm of Carnegie, Mc- 
Candless & Co. was dissolved, and the Edgar Thomson Steel 
Company, Limited, was incorporated with a capital of ;^ 1,000,- 
000 to take its place. On October 31st the unfinished works 
at Braddock were transferred to the latter corporation, the con- 



ON THE VERGE OF DISASTER 



77 



sideration being $631,250.43, subject to a mortgage now 
amounting to $201,000. 

The works were laid out under the supervision of A. L. 
Holley, the well-known Bessemer engineer, who offered a guar- 
antee that the plant would have a capacity of seventy-five thou- 




A. L. llOLLi:^-, 

Builder of the principal Bessemer Steel Works in America. 

sand tons of ingots a year. Ground was broken on April 13th, 
1873. Before the work was more than well started, however, 
the panic involved the firm in great financial difficulty; and but 
for the high standing of McCandless, Stewart, and Scott, the 
infant industry would have suffered an early death. As it was, 
an issue of bonds was found necessary. These conferred on 



7^ THE STEEL BUSINESS 

holders the right to exchange them within three years for paid- 
up stock in the company. J. Edgar Thomson took a hundred 
of these bonds; and Colonel Scott, true to his traditional help- 
fulness, took fifty. This gave the firm $i 50,000 at a time when 
it was worth double that amount ; and Gardiner McCandless, 
son of the chairman of the company, bought about ^70,000 of 
the bonds for himself and friends. Besides tiding it over a 
period of difficulty and danger, this bond issue brought to the 
company the prestige and favor of President Thomson and 
Colonel Scott, as was found as soon as it entered the market 
with its rails. 

While the works were in course of construction a curious 
development took place at Johnstown, which greatly benefited 
the Edgar Thomson Company. In the spring of 1873 a labor 
dispute took place at the Cambria Iron Works. The trouble 
grew out of an extraordinary situation. Foreseeing difficulty 
with the local labor union, the Cambria Company induced its 
principal men in all departments to become members of the 
organization ; hoping that in this way they would get control of 
it and manage it in the company's interest. For some reason 
these men failed to get control, and a strike being ordered by 
the union they had no alternative but to obey, at least for the 
time. Hoist by their own petard, the company's officials capped 
their blunder by telling these foremen that their situations 
would be forfeited unless they brought the dispute to an end. 
In those days, as we have seen in the case of the puddlers' 
strike at the Union Iron Mills, labor disputes with capital were 
in an elemental stage; and it is barely possible that the simple 
measures of the Cambria officials might have ended the trouble. 
But Andrew Carnegie, hearing in New York of the dispute, 
returned hastily to Pittsburg, and proposed to his firm that 
these heads of the Cambria departments be invited to join the 
new works at Braddock. This was done; and Capt. William 
R. Jones having accepted the invitation, the leading men in 
every department hastened to follow his example. In this way 



JONES THE PEERLESS 79 

Carnegie, McCandless & Co. secured a corps of trained men 
who had gone through the cosfly apprenticeship of Bessemer 
steel-making at the expense of a rival concern. It was a master 
stroke, and at once carried the embryo business past the experi- 
mental stage.* Among the men thus secured, in addition to 
Captain Jones, who was without a peer, were Captain Lapsley, 
superintendent of the rail mill, John Rinard, superintendent of 
the converting works, Thomas James, superintendent of machin- 
ery, Thomas Addenbrook, head furnace builder, F. L. Bridges, 
superintendent of transportation, and C. C. Teeter, chief clerk. 
Later, scores of others followed. Indeed, there was hardly a 
skilled workman in the whole of the Cambria plant that did not 
want to join his beloved "Bill" Jones; and when the Edgar 
Thomson mill was ready to open, many of them did so. During 
the panic the first arrivals were put on board wages, and kept 
about the place until the trouble was passed, and the work of 
construction resumed. 

Captain Jones, who was made superintendent of the works, 
was probably the greatest mechanical genius that ever entered 
the Carnegie shops. He had passed, moreover, through every 
branch of the iron and steel manufacture ; and there was nothing 
in the works of which he had not that intimate knowledge 
which comes through the hand alone. His power to manage 
men, joined to his inventiveness and thorough practical training, 
made him the most conspicuous personal element in the phenom- 
enal success which attended the enterprise from the very first. 
He gave many valuable suggestions to Mr. Holley while the 
plant was being erected, which were frankly adopted; and his 
later inventions added enormously to the profits of the firm 
every year of his life, and long after. Even in 1903 the United 
States Steel Corporation filed a bill in equity to restrain the 

* " Its [the Edgar Thomson plant] successful operation is greatly due to the 
large experience in Bessemer manufacture of Capt. William R. Jones, general 
superintendent of the works and of Capt. Thomas II. Lapsley, superintendent of 
the rolling mill, who have a force under them largely composed of men experienced 
in the manufacture of rails." — American Manufacturer, November i8th, 1875. 



8o 



THE STEEL BUSINESS 



Jones & Laughlin Steel Company from using the famous metal 
mixer which Captain Jones invented for the Edgar Thomson 

Company; and this one de- 




Pouring hot metal into the Jones Mixer. 



vice, used as it is in every 
Bessemer department of the 
great steel corporation, is still 
the means of saving it mil- 
lions of dollars every year. 
At the same time no detail 
was too small for Captain 
Jones' personal attention. 
This indeed was one of the 
secrets of his success with 
workmen. He was ever on 
the lookout for their comfort. 
He personally attended to the 
ventilation of the shops ; and, as another little illustration of his 
care, may be mentioned a generous supply of oatmeal and water 
for drinking purposes. To 
Captain Jones is also due the 
system of rewards for excep- 
tional service which after- 
wards characterized the ad- 
ministration of all the Car- 
negie properties, and which 
has since been extended, with 
beneficial effects, to all the 
constituent parts of the Unit- 
ed States Steel Corporation. 

In illustration of the wise 
and broad views held by Cap- 
tain Jones in regard to labor, 
an interesting letter written 
by him at this time may here be quoted. It also gives some data 
concerning profits which are worth preserving. It is as follows : 




Molten metal flowing from the Jones Mixer. 



A VALUABLE LETTER 8i 

Works, Feb. 25, '75- 
E. V. McCandless, Esq. ^ 

Dear Sir: I wrote you somewhat hastily last night. In 
regard to the figures I gave you of cost of mixture, I gave you 
the Cambria figures, viz. mixture at ^35 which of course in- 
cludes Spiegel metal which is (a) great deal more than it really 
cost them. A friend of mine who has gone over their estimates 
carefully gives as the cost of one ton of steel rails $44. Now 
allow for at least 15^ on half they pay for labor as profit they 
derive from their store, and you will readily see that the profits 
of the Cambria works on steel are simply enormous. 

I will give you their figures again in a more intelligent 
manner : — 

Cost of mixture : pig-iron and spiegel $35 

Credit allowed converting department per ton of ingots. ... 9 

" " blooming mill per ton of blooms 3 

" " rail mill " " " rails 10 

Total cost of producing a ton of rails $57 

Now in order to show you how much more above the actual 
cost they put their figures, I know of plenty of men who will 
take their rail mill at $4.00 a ton and find everything. 

Now I know that the profits in manufacturing steel rails are 
enormous. If such works as the Pa. Steel Co. and Newburgh, 
Ohio can manufacture rails and make money these works can 
certainly yield very handsome profits. 

Now I will give you my views as to the proper way of con- 
ducting these works. 

1st. We must be careful of what class of men we collect. 
We must steer clear of the West where men are accustomed to 
infernal high wages. We must steer clear as far as we can of 
Englishmen who are great sticklers for high wages, small pro- 
duction and strikes. My experience has shown that Germans 
and Irish, Swedes and what I denominate '' Buckwheats " — 
young American country boys, judiciously mixed, make the 
most effective arid tractable force you can find. Scotsmen do 
very well, are honest and faithful. Welsh can be used in lim- 
ited numbers. But mark me. Englishmen have been the worst 
class of men I have had anything to do with; and this is the 
opinion of Mr. Holley, George and John Fritz. 

2nd. It should be the aim of the firm to keep the works run- 
ning steadily. This is one of the secrets of Cambria low wages. 
The workmen, taking year in and year out, do better at Cambria 
6 



82 THE STEEL BUSINESS 

than elsewhere. On steady work you can calculate on low 
wages. 

3rd. The company should endeavor to make the cost of liv- 
ing as low as possible. This is one bad feature at present but 
it can be easily remedied. 

These are the salient points. The men should be made to 
feel that the company are interested in their welfare. Make 
the works a pleasant place for them. I have always found it 
best to treat men well, and I find that my men are anxious to 
retain my good will by working steadily and honestly, and in- 
stead of dodging are anxious to show me what a good day's work 
they have done. All haughty and disdainful treatment of men 
has a very decided and bad effect on them. 

Now I have voluntarily given you my views. I have felt 
this to be a necessity on my part ; for I am afraid that unless 
the policy I have marked out is followed we need not expect the 
great success that is obtainable. These suggestions are the 
results of twenty-five years' experience obtained in the most suc- 
cessful iron works in this country : — Crane and Thomas Iron 
Works, Port Richmond Iron Works, and the Cambria works. 

You are at liberty to show this letter to your father and Mr. 
Coleman ; otherwise regard it as a confidential letter. 

Yours truly 

W. R. Jones. 

The converting works were completed in August, 1875; and 
on the 22d of that month the first blow was made. On Sep- 
tember 1st the first rail was made, and a piece of it, made into 
a paper weight and stamped with this date, presses on this page 
as it is written. 

At this date Bessemer steel production in America had pro- 
gressed to important proportions, the output of the country for 
1875 being 375,517 tons. Of this amount 290,863 tons were 
rolled into rails. The business had grown from 3,000 tons in 
1867. In England Bessemer steel rails had been known since 
1857; so that in no sense was the Edgar Thomson Company 
a pioneer. It is indeed noteworthy that in anticipation of the 
change from iron to Bessemer steel which every railroad man 
foresaw, the production of iron rails in the United States fell 
from 900,000 tons in 1872 to 500,000 tons in 1875. In this 



RAILROAD FAVORS 83 

one decade the output of steel rails multiplied nearly thirty 
times — from 34,000 tons in 1870 to 954,460 tons in 1880. 
The subsequent advance has also been great ; for from less than 
a million tons of steel rails produced in 1880, the output rose 
to 3,000,000 tons in 1902, while the price had fallen from $106 
a ton in 1870 to $17 a ton in 1898. 

Many things combined to make the Edgar Thomson enter- 
prise a success from the start ; and in so far as these were fore- 
seen and planned, they serve as evidence of the consummate 
skill of its projectors. Coleman must be credited with the 
great advantage which resulted from the intimate relations the 



^.^^sai-. 




The Edgar Thomson steel works in 1875. 



firm had with the chief officials of the Pennsylvania Railroad. 
It was he who induced Stewart and Scott to join the scheme. 
To him also was due the exceptional pains taken to educate 
Andrew Carnegie in the merits of the enterprise, and thus indi- 
rectly to reach Carnegie's late associates, Mr. J. Edgar Thomson 
and Colonel Scott. That these important men favored the 
company which bore the name of one of them is evidenced by 
the fact that some of the directors of the railroad, who were 
interested in rival concerns, presently insisted upon a fair divi- 
sion of the Pennsylvania's patronage, so that a portion of their 
orders for rails afterwards went to the steel works at Johnstown 
and Harrisburg. 

In regard to the charges of preferential treatment in the 
matter of freight rates which have often been made in this con- 



84 THE STEEL BUSINESS 

nection, it can be said in all frankness that, while they were not 
unfounded, they were greatly exaggerated. The Edgar Thom- 
son Company got exactly the rates and rebates that other ship- 
pers of equal importance had. Full local rates were paid ; but, 
owing to the saving to the railroads resulting from the steel 
company's system of loading cars, and even at times making up 
the train, it was only fair that the latter should share in the re- 
sults of this economy. So there was established a system of 
rebates. A monthly statement of the sums paid for freight and 
due in rebates was made out ; and the rebates were paid almost 
as soon as the statements were presented to the railway com- 
pany. While these sums were considerable, and probably in- 
ured to the injury of com- 
peting iron-rail makers in 
the same district, they were 
no greater than those re- 
ceived by other manufact- 
urers of steel rails who 
loaded their own ship- 
ments. 

At first this rebate sys- 
■^ tern was confined to the 

"'inere goes that bookkeeper." 

Pennsylvania lines ; but 
presently President Garrett, of the Baltimore and Ohio Rail- 
road, who had some suspicion of the facts, sent representatives 
to Pittsburg to learn the reason of the apparent discrimination 
against his road. As a result of their report Mr. Shinn, general 
manager of the Edgar Thomson works, received an invitation to 
visit Mr. Garrett in Baltimore, when an arrangement similar to 
that in force with the Pennsylvania company was made, and 
the traffic was then divided between the two roads. 

Another factor which contributed in no small degree to the 
success of the firm was the voucher system of accounting which 
Mr. Shinn introduced. This had long been used by railroads, 
and the Standard Oil Company's accounts were thus kept ; but 




SHINN'S SYSTEM OF ACCOUNTS 85 

it was not in general use in manufacturing concerns, and the 
Edgar Thomson Company was the first to adopt it in Pittsburg. 
No order for rails was ever accepted until there had first been 
ascertained the actual cost of every element entering into their 
manufacture, and options obtained on the pig-iron of which they 
were to be made. An eloquent testimony to the efficiency of 
this method of accounting was given by a workman engaged 
in building a heating-furnace : " There goes that book- 
keeper. If I use a dozen bricks more than I did last month, he 
knows it and comes round to ask why ! " This was no exag- 
geration. The minutest details of cost of materials and labor 
in every department appeared from day to day and week to week 
in the accounts ; and soon every man about the place was made 
to realize it. The men felt and often remarked that the eyes 
of the company were always on them through the books. If the 
workmanship was exceptionally good, or the output beyond the 
high average which was insisted upon, the head of the depart- 
ment received a letter of congratulation and perhaps a present at 
Christmas. If it fell behind in either quality or output, the 
fact was promptly brought to his notice, and Captain Jones him- 
self would see if the fault lay in the machinery. If it did, he 
generally knew how to remedy it. If the defect was in the 
human machine, and reproof did not suffice to correct it, the 
man was replaced by the understudy which Jones usually had 
trained in view of such a contingency."^ 

In 1877 it was found that more steel ingots were being 



* Dr. Frank Cowan has written a unique poem on the contrast presented by 
the actual condition of^ Braddock's Field with that of the day of the battle on 
July gth, 1755. Here are a couple of verses : 

Where the cannon of Braddock were wheeled into line. 

And swept through the forest with shot and with shell — 
But woe to the Britons! In vain they combine 

The thunder of heaven and the lightning of hell! 
There the turning converter, while roaring with flame, 

Pours out cascades of comets and showers of stars, 
While the pulpit-boy, goggled, looks into the same — 

Thinking little of Braddock and nothing of Mars. 



86 THE STEEL BUSINESS 

made than the rail-mill could roll ; and an attempt was made to 
capture the local market for merchant steel. Some billets of 
high-carbon steel were made and submitted to a firm of buggy- 
spring makers. To their astonishment the material was satis- 
factory ; and they gave a large order for billets at three cents a 
pound. Then some samples of axle steel for cars were sub- 
mitted to the Pennsylvania Railroad Company, and subjected to 
tests by experts who did not know that they were not the cruci- 
ble steel usually employed for car-axles. Again the tests were 
satisfactory, and large orders resulted. Next came the more 
difficult test of making steel for plow- shares, which required a 
soft ductile metal capable of being welded to sheets of crucible 
steel. Even these severe conditions were met. Finally the 
firm made steel capable of being rolled cold down to a paper 
thinness for use as stove-pipe, roofing-channels and cartridge 
cases stamped out of the sheet. So that, two years after the 
realization of his dreams, Tom Carnegie had the satisfaction 
of showing to his brother as many varieties of excellent steel 
made at the Edgar Thomson works as he had previously seen 
in England. But by this time the elder Carnegie was the most 
enthusiastic member of the company and needed no such re- 
minders. 

The profits of this line of business were very great ; but the 
capacity of the rail-mill having been enlarged, and the demands 
of the railroads ever increasing, the company abandoned the 
manufacture of merchant steel for the time being and returned 
to the exclusive production of rails. The demand that had thus 
been created, suddenly found itself shut off from supplies ; and 



Where the guns of the foe were revealed by a flash — 

A report — and the fall of the killed and the wounded. 
Till the woods were ablaze, and a deafening crash 

With the wail of the wounded and dying resounded ; 
There the ingot aglow is drawn out to a rail, 

While the coffee-mill crusher booms, rattles and groans, 
And the water-boy hurries along with his pail, 

Saying, Braddock be blowed! he's a slouch to Bill Jones. 



A RIVAL IN THE FIELD 87 

an interesting development resulted. This was the establish- 
ment of a rival converting plarTt at Homestead by the group of 
manufacturers who had been educated in the use of Bessemer 
steel in place of the more costly crucible steel which they had 
previously used. Pending the erection of the new plant, an 
enterprising firm of Pittsburg brokers got Mr. McCandless, the 
former bookkeeper of the Edgar Thomson Company, to go to 
England to buy the merchant steel necessary to fill local de- 
mands. In two years this firm sold nearly two million dollars' 
worth of English steel at a profit of $5 to ^15 a ton, after pay- 
ing forty- five percent, duty and both ocean and railroad freights. 
At the end of two years the Edgar Thomson Company sought 
to head off the independent manufacturers at Homestead and 
resumed the manufacture of merchant steel. The import busi- 
ness suddenly ceased ; and these profits with others went into 
the erection of a series of blast-furnaces which became the won- 
der of the iron-making world. 

Up to this time the Lucy furnaces had been supplying most 
of the pig-iron used by the Edgar Thomson Company; but as 
the members of the latter corporation were not all interested in 
the furnaces, there arose differences among them as to the 
proper price that should be paid for pig-iron. Although these 
differences were finally adjusted by a sliding scale based on the 
price of steel, the discussion developed in Shinn, McCandless, 
Stewart, and Scott a desire to own their own blast furnace. 
The desire was strengthened by the phenomenal profits of the 
Lucy plant, which had paid for its construction in a single year. 
Eventually an agreement was reached, and furnace A was 
erected at Braddock. 

This furnace was a part of the Kloman wreck, namely, the 
little charcoal furnace which he had built at Escanaba. It was 
bought for a mere song — a little over ;^ 16,000 — and such parts 
as could be transported were brought down and installed at the 
Edgar Thomson works. This was in 1879. Mr. Julian Ken- 
nedy was put in charge of its erection, and afterwards of its 



ss 



THE STEEL BUSINESS 



operation. It was "blown in" in January, 1880, and yielded 
442 tons of pig-iron the first week. In view of the fact that its 
cubical capacity was but 6,396 feet compared with 15,000 feet 
in the Lucy Furnace, this large product excited great astonish- 
ment. The fourth week, however, it made 537 tons; and dur- 
ing the following month (March) its output reached a total of 




JULIAN KENNEDY, 



2,760 tons, while the coke consumption was reduced by May to 
1,945 pounds per ton of iron produced. Later the output of a 
single week ran up to 671 tons, and the iron-making world 
regarded the achievement with wonder. 

In April, 1880, a second furnace, constructed by Mr. Ken- 
nedy, was put in blast, which in its third month showed an 
output of 4,318 tons, and at the end of the first half year was 
making the marvellous total of 4,722 tons in a single month. 



A GREAT EVOLUTION 89 

During the first twelve months this furnace produced 48,179 
tons. In 1883 a third furnac^ was put in, and in its second 
month passed all previous records by a yield of 6,045 ^o^s ; and 
in the first twelve months made 65,947 tons of pig-iron. Dur- 
ing the next three years two other furnaces were erected; and 
in December, 1885, one of them yielded 6,451 tons, the total 
for twelve months being 74,475 tons. In October, 1886, still 
another furnace was "blown in," and in January, 1887, three 
months afterwards, it produced 8,398 tons on a coke consump- 
tion of 1,935 pounds per ton of pig-iron. Its total output for 
twelve months was 88,940 tons. These were the world records 
at the time ; but changes in the construction of one of the other 
furnaces, made under the supervision of Mr. James Gayley, 
one of the ablest of the so-called "young geniuses," brought 
the monthly record in December, 1889, to 10,603 tons on a 
coke consumption of only 1,756 pounds! These figures indi- 
cate at once the rapid growth of the business of the Edgar 
Thomson Steel Company and the proportionate advance made 
by its superintendents in the art of iron production. Both rec- 
ords, at that time incomparable even in this great land of 
rapid growth, have since been repeatedly broken by the same 
firm. 

Here this great evolution may be seen at a glance : 



FIRST FURNACE. 

,. J ^, T- J J Pounds of coke 

Years and months. Ions produced. . . 

per ton of iron. 

1880 — April 2,723 2,536 

May 3.718 2,574 

June 4,318 2,344 

July...- 4.345 2,706 

August 4,601 2,811 

September 4, 221 2, 757 

October 4, 722 2, 736 



SECOND FURNACE. 

1882 — Second month ,... 6,045 2,617 

Average for twelve months 5.495 2,570 

Best month 6, 131 2, 387 



90 THE STEEL BUSINESS 



THIRD FURNACE. 

Years and months. Tons produced. , . 

pet ton of iron. 

1 885 — October 6, 320 2, 396 

November 6,306 2,396 

December 6, 45 1 2, 1 72 

1886 — January and February Shut down. 

March 6,352 2,105 

FOURTH FURNACE.* 

1886 — November 6, 735 2, 128 

December 7, 494 2, 105 

1887 — January 8,398 i,935 

1889 — October 6,512 2,450 

November 91O97 1,897 

December 10, 603 1.756 

1890 — January 10, 536 i, 736 

February 8,954 1.859 

March 9.941 1,845 

April 10, 075 1, 847 

May 10,035 1,884 

Hardly less remarkable were the results achieved in the con. 
verting and rail departments. In the four months ending De- 
cember, 1875, 6,555 tons of rails were produced, although, 
through a scarcity of spiegel, the works lost two weeks. At 
this time a thousand tons a month was considered a good aver- 
age for the first year of a two five-ton converter plant. In the 
twenty-six working days of January, 1876, the product of 433 
blows was 2,550 tons of ingots, or 2,055 tons of rails. In a 
single week in February 119 heats gave 707 tons of ingots, 
while the blooming-mill passed 709 tons, and 560 tons of rails 
were rolled. During the first full year of its operation (1876) 
the mill produced 45,563 tons of steel. The tonnage of rails 
was 32,228. In January, 1877, the product of a week was 
more than double the extraordinary record of the preceding Feb- 
ruary; the output being 1,543 tons of ingots and 1,129 tons of 
rails. The way this was done is naively explained by a local 

* Twelve years later one of the above furnaces produced in one month, 
December, 1902, a total of 17,449 tons of pig-iron on an average coke consump- 
tion of 1,875 pounds. 



AMAZING RECORDS 91 

journalist of that day : " Mr. Campbell, a roller, ten days or 
two weeks ago, rolled 540 rails In eleven and a half hours, which 
is 108 more than the usual run for twelve hours. This put 
John Little, another roller, on his mettle, and last Thursday 
night he rolled 600 thirty-foot rails in eleven and a half hours 
— thus beating his competitor by 60 rails and the usual run by 
168 rails. John may be Little, but the Edgar Thomson wants 
that Little here below, and wants that Little long!" In the 
twenty-four working days of the following February, 915 blows 
produced 5,993 tons of ingots; 4,474 tons of rails were rolled 
and 182 tons of billets. On the 26th of February the day's 
product was 383 tons of ingots — half as much as was produced 
in a week the year before. The product for March was 8,002 
tons of ingots. 

A little less than two years before this Mr. A. L. Holley, 
then managing the Rensselaer Steel Works at Troy, wagered 
the Hon. John A. Griswold, one of the proprietors, that their 
Bessemer plant (two converters) could produce in one month 
1,500 tons of ingots. He won his bet, of course; and the fig- 
ures 1,500 and 8,000 mark the advance of American steel- mak- 
ing at this time in twenty-three months. 

This rate of progress was maintained during the next two 
years. In September, 1879, ^^^ Edgar Thomson beat all the 
records of two-converter plants by producing 10,788 tons of 
ingots. The tonnage of a single day was 5 19, of a week, 2,536. 
The output for the year (1879) was 107,877 tons of ingots, of 
which 76,043 tons were rolled into rails. In November the 
two converters produced 13,116 tons of ingots, and the mill 
10,037 tons of rails. The total rails for the working year, nine 
months and twenty-nine days, was 100,094 tons. Incidentally 
the profit of the Edgar Thomson works for 1880 amounted to 
$1,625,000; and there were orders booked for 80,000 tons for 
the following year. 

The known facts — of course no outsider knew the profits, 
which are now made public for the first time — produced surprise 



92 THE STEEL BUSINESS 

and chagrin in competing plants. In England the news was 
received with doubt. ''An almost incredible statement," said 
E. Windsor Richards, the British steel manufacturer ; and when 
Captain Jones, in a paper read before the British Iron and Steel 
Institute, gave details and dates, incredulity gave way to con- 
sternation, for it was plainly to be seen that England's suprem- 
acy in steel was at an end. Here is the amazing record in 
detail: 

NOVEMBER, 1880. 

Number of vessels, 2. Blows, 1,746. 
Average charge, lYz tons. 

Tons of Ingots 13, ii6^§ 

Blooms 12, i68i|^^ 

Rails ii.037ill^ 

Billets 68^Vff 

Merchant blooms 4^ftir 

Total finished product 1 1 , 100 

At this date the Edgar Thomson had held the record for 
nearly three years. During the next six months it beat this 
record out of shape. In the first six months of 1881 the two 
converters produced T^y.J^^ tons of ingots as against 55,428 



II 


%: 1 


'-^■■. *.., W- 


m 


!i-*'' |1 


1 ^-^^^S'l^ 


\ Mt 


-^-^#- ;« 


i_ ^fM^n..■U--r -iw 


I % 


^HI^^^H 


:^^Sm^-^ \ 


W'-'- —- — -^^-^^ 



A train of rolls. 



tons for the corresponding period of 1880 — an increase of thir- 
ty-eight per cent. The best twenty-four hours' work was 623 
tons. The product of a week was 3,433 tons; the best month, 
14,033 tons — more than nine times the tonnage of Holley's bet 



CAPTAIN JONES' TRIUMPH 93 

six years before ! The rail-mill in the same time produced 
65,087 tons as against 43,372 tbns in the corresponding half of 
1880 — an increase of a fraction over fifty per cent. The aver- 
age weekly yield of rails was 2,503 tons as compared with 1,664 
tons in 1880. 

These newer facts were again presented by Captain Jones 
to the British Iron and Steel Institute ; and before the astonished 
Englishmen had time fully to digest them, he sent a fresh record : 

November, iSSi — Ingots i6, 193 tons. 

Rails 13,646 

Best 24 hours' work — Ingots 700 

*' " " " Rails 608 

Best week's work — Ingots 3.902 

" " " Rails 3,202 

Soon afterwards the works were enlarged and the direct metal 
process was introduced ; but the product was not proportion- 
ately great, and the record passed from Captain Jones to Mr. 
Julian Kennedy, who by this time had been put in charge of 
the Homestead works. Captain Jones' great and noteworthy 
triumph forms one of the most picturesque episodes in the his- 
tory of the Carnegie organization. 

* For purposes of comparison a few details of the product of the earlier steel 
works in America may here be given. These were, like the Edgar Thomson, all 
two five-ton converter plants, working eleven turns or five and one-half days a 
week. 

Tons Tons ^ 

Heats, Heats, Ingots, Ingots, ions Ingots, 

24 hours. week, 24 hours. week.' month. 

1868 , 500 

Cambria. Harrisburg. 
1 , 700 



1870, Troy and Harrisburg 

1872, Harrisburg .... 

H arrisburg 

1873 251030 180 

Cambria 

1874, Harrisburg 46 189 

Troy 50 

" Troy 195 

" North Chicago 

" Cambria 211 



640 2,000 

890 

956 

267 2,899 

972 
3.526 



These were all two five-ton converter plants working eleven turns or five and 
one-half days a week. 




CHAPTER VII 

SOME INSIDE FINANCIAL HISTORY 

THE striking achievements just set forth formed 
a legitimate source of pride and exultation 
in the firm; and the gratification of every 
member was increased by the wondering 
comments of the trade and the public, 
whose attention was invited to these 
^^^St^i mechanical victories by officially verified 
^ newspaper notices and by papers and 

speeches before the iron and steel associations in England 
and America. Braddock became the Mecca of iron and steel 
manufacturers from all over the world. 

On the subject of profits there was naturally no disposition 
to take the public into the confidence of the firm. The protec- 
tion of infant industries was a subject on which there was 
divided opinion in the council-chambers of the nation; and 
manufacturers showed a proper caution in concealing the extent 
of their gains. Indeed, the Carnegies at this time accepted 
what seemed to them a large monetary loss rather than produce 
the books of the Edgar Thomson Steel Company in court in 
response to a judicial order. Now, however, that the golden 
harvest is safely garnered and beyond the reach of legislators 
and others who might " break through and steal," there is no 
reason why the gratifying results of the government's wise pol- 
icy of protection should not be set forth. 

The admirable system of accounting introduced by Mr. 
Shinn enabled the Edgar Thomson managers to see at a glance 
the exact cost of every one of the many operations entering into 
the manufacture of a ton of ingots, blooms, or rails. Every 

94 



EARLY COST SHEETS 95 

month cost sheets were made out in which these items were 
given to the hundredth part of a'^cent. These statements were 
marvels of ingenuity and careful accounting. 

The first was issued on October ist, 1875. I^ g3.ve in de- 
tail the output and cost of the first month's run, together with 
the name of the purchasing railroads and the prices received. 
It was a gratifying document to the anxious partners. The 
output for September, 1875, was 1,1 192-fl-o tons of rails. Their 
cost was exactly $57 a ton, including all charges, even to office 
expenses and maintenance of the plant. The prices received 
averaged $66,50 a ton at the works, thus leaving a clear profit 
of $9.50 a ton, and a total of over $10,000 on the month's work. 
In the second month the output was 1,8 17|-||-|^ tons, which cost 
$57.20 and sold for $66.32. At the end of the year the aver- 
age of four months' operations showed that ingots had cost 
$44.33 a ton, blooms $47.17, and rails $58.45. The average 
price at which they sold was a fraction under $66 a ton, giving 
a total profit on rails of $41,970.06. The percentage of rails 
from pig-iron and spiegel was eighty and fifty-six hundredths; 
and this was afterwards used as a basis on which to figure the 
making of contracts. 

During the following year the improvements in processes 
made by Captain Jones, already referred to, greatly increased 
the output and reduced the cost. On the other hand, prices also 
fell. Andrew Carnegie wrote this year to one of his colleagues : 

" We must not loose sight of the fact that the great products 
now made must effect prices. I look for Cost to be reached for 
a short time say 50^^ at mills with us. Some concerns must 
stop, therefore any orders we can take netting above 52^^ had 
better be taken — 55$ at mills is a tall price. — Penna steel [i.e. 
Pennsylvania Steel Co.] has offered 60$ Balto to Georgia RR. 
but I hope to get a small order — " 

In the same letter, however, he waxes enthusiastic over the 
future : 

"What do you really figure we can put rails at cost — run- 



96 INSIDE FINANCIAL HISTORY 

ning double 4000 Tons per Mo. on this basis — Cant we shade 
50;^ If so where is there such a business — " 

And so alluring is the picture in his mind that in the next sen- 
tence he says : 

" I want to buy Mr. Coleman out & hope to do so. — " 

But that is another part of the story. 

Concerning his great expectations at this time, the following 
extract from a letter of his to Shinn, dated April 13th, 1876, is 
interesting. He estimates future profits at forty per cent, per 
annum, or $300,000 net on a capital of ;^750,ooo. 




^^ '^t.jC-**--.-^^^ 



- ^yti^ cc.*^ 



^ UlAJk t^-*l^ '^w-/ ^2A~Q ^xfi^m^ti^t^^^if. ^^^"^^-t*^ 

[Photographic reproduction.] 

The price of rails this year (1876) dropped steadily from 
$6^ in January to $52 in December; but the average price re- 
ceived by the Edgar Thomson Company for the sixteen months 
ending December 31st, 1876, was $6o.6\^. The product for 
the year was 32,228 tons, and for sixteen months 38,284 ^y/o 



FIRST GREAT PROFITS 



97 



tons. The cost of manufacture, which averaged $56.98^ for 
the first seven months, had dropped to ^53. 19 for the second 
seven months. The net earnings for the year amounted to 
$181,007.18 on a capital issue of ^731,500. 




The Edg-ar Thomson Steel Works in 



The output of rails for 1877 was 42,8262^4^(7 tons. Both 
prices and cost of manufacture show a remarkable decline. 
They are as follows : 



Cost at Price 

E. T. works. at mills. 

January $46.67" $49-00 

February. 44.89 49.00 

March 44. lo'** 49.00 

April 43.58^ 49.00 

May 45.63=^' 47.25 

June 42.28"3 46.50 



Cost at Price 

E. T, works at mills 

July $44.87'" $45-25 

August 42.55'"* 44.75 

September 43.83"- 44.00 

October 42.00''^ 42.25 

November 40.13''* 40.50 

December 40.35®^ 40.50 



It must not be inferred from this that during the later 

months of the year the company was running at a loss; for the 

rails made in November and December had been sold at prices 

prevailing nine or twelve months earlier. At the same time 

7 



98 



INSIDE FINANCIAL HISTORY 



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ri^a^ 






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PAGE OF FIRST ANNUAL REPORT. 
Photographic copy of the original document. 



" WHERE IS THERE SUCH A BUSINESS!'' 99 

profits were greatly diminished, and the year's balance sheet 
showed only a net gain of ^36,673.33. But about $115,000 
had been spent on the works and some $20,000 of indebtedness 
had been paid off. As a matter of fact, the profits of all the 
Carnegie works this year aggregated $190,379.33. 

In February of this year the first dividend was declared, 
being twenty-five per cent, in scrip. In August a second divi- 
dend of fourteen per cent, was declared, part of which was ap- 
plied on stock and part paid in cash. In this way the capital 
was raised to $1,000,000. In October dividend No. 3, of two 
and three-fourths per cent., was declared ; making a total for the 
year in cash and stock of forty-one and three- fourths per cent. 

At the beginning of 1878 Andrew Carnegie indulged again 
in his habit of prophecy, and scribbled for the benefit of one of 
his partners his great expectations for the year. This rough 
memorandum is not very clear in its details, but it shows that 
further reductions in cost to $38 were expected, while the price 
to be received was put at $42.50, with an allotment by the steel 
rail pool of 60,000 tons. This would give a profit of $240,000 
from rails, and other additions not now traceable were expected 
to bring the total net profit to $250,000. Well might he ex- 
claim, " Where is there such a business ! " 

Let us see how the prophecy turned out. By March, 1878, 
thanks to Captain Jones' excellent practice at the works, the 
monthly product of rails had reached 7,383^!^ tons. The 
cost of ingots had been reduced to $29. 50 and that of rails to 
$37.77. During the year the cost of making rails did not go 
more than a few mills above $38. In April it was $38.06^ ; 
in May, $36.81 ; in June, $37.92^ ; in July, $38.01 ^ ; inAugust, 
$37,829; in September, $36. 98 7 ; in October, $36.1 1^ ; in No- 
vember, $36.41^; and in December, $36.52^. The average 
price at which they were sold was $42.50, exactly correspond- 
ing with Carnegie's guess. The net profits of a single month 
(November) amounted to a fraction over $52,000; and Andrew 
Carnegie, a propos of lofty heights, writes from Sorrento : 



L,:fC. 



100 



INSIDE FINANCIAL HISTORY 



" Pyramids & Mt Etna & Vesuvius have been our last climbs 
— Mt E of course we did only from the base, Tell Capt 
Jones there was a proud little stout man who gave a wild hurrah 
when he saw E T ahead. Was nt it a close race with C I. 
Co. but they had a start, besides we had to go through the 
measles you know " 



The earnings of the Edgar Thomson works this year were 
^401,800 — over thirty-one per cent, on its capital, which had 
been increased to ^1,250,000. Andrew Carnegie, by the way, 
subscribed for the whole of this increase ; and a year later was 



THEORY. 

' ' "We are creatures of the tariff, and if ever the steel 
manufacturers here attempt to control or have any 
general understanding among them the tariff would 
not exist one session of Congress. The theory of pro- 
tection is that home competition will soon reduce the 
price of the product so it will yield only the usual 
profit. Any understanding among us would simply at- 
tempt to defeat this. There never has been or ever 
will be such an understanding." — Andrew Carnegie, in 
American Alanufacturer, July 2^1 h, 1884. 



y 



shown by the balance sheet to owe the company ^175,000 on 
account of stock subscription — a simple and easy method of 
becoming a ''majority stockholder." 

The next year the price of rails took a sharp upward spurt, 
reaching $6"] a ton in December and ^85 by February, 1880. 
In the same period the cost of manufacture was slightly re- 
duced. In January, 1879, rails cost ^38.60*^ a ton to make, and 
in May, ^35.84^. During the first six months of this year the 
Edgar Thomson works made ^252,854. The second half of the 
year the gains were even greater. In August, with rails selling 
at ^48, there was a clear profit of ^10.50 a ton (pig-iron had 



PROFITS 140 PER CENT. 10 1 

gone up $12.50); in October a fraction under $15, and by De- 
cember over $22 a ton net profit. The monthly output of in- 
gots now exceeded 10,000 tons, and of rails five to six thousand 
tons. " Where is there such a business ! " 

These golden times continued throughout the following 
year. In January the difference between the selling price of 
rails and the cost of pig-iron was $53 a ton, the former being 
$75 and the latter $22 a ton. The next month it was $65, and 
of this something like $40 a ton was clear profit to the Edgar 
Thomson Steel Company, who were running day and night and 



PRACTICE. 




Profit. 
EDGAR THOMSON STEEL WORKS. 

On rails, payment by rail pool. $123,983.28 


Loss. 


HOMESTEAD STEEL WORKS. 
Axles, pool assessments. . 
Beams, " '< 


$22,345.32 
29,392.84 


Channels, " " 


13,002.74 


Armor plate pool 100,842.59 




UPPER UNION MILLS. 
Zees, pool assessment. . . '- ' 


5,518.70 


Angles, " " 
Tees, " " 


57,755.08 
4,456.32 


Beams, 


351.32 


Channels, " " 


366.97 


— From J^rojit and Loss account of Carnegie Steel Company for iSgg. 



had orders for 80,000 tons of rails. Without burdening this 
narrative with further details of costs and prices, it may be 
briefly stated that in this twelve months the Edgar Thomson 
works made a profit of $1,625,000. For an infant industry not 
out of its swaddling-clothes that was a very fair showing; and 
was certainly as legitimate a cause of exultation on the part of 
the members of the firm as those more public triumphs in me- 
chanics already spoken of. The highest price of rails reached 
this year was $85 a ton. Who shall say in presence of these 
facts that protection is not synonymous with prosperity } 

To the Carnegies the tariff was specially helpful at this 



I02 INSIDE FINANCIAL HISTORY 

time, when an extraordinary demand arose for iron and steel in 
all its forms. The American manufacturers were unable to 
meet this demand, and prices rose to a point at which importa- 
tions of foreign steel could be made despite the high duties. 
From $19,000,000 in 1879 these importations rose to over 
$71,000,000 in 1880, $60,500,000 in 1881, and $68,000,000 in 
1882. Simultaneously the profits of the Carnegie companies 
rose from $512,068.46 in 1879 to $2,000,377.42 in 1881, and 
$2,128,422.91 in 1882; for while the cost of rails was between 
$34 and $38.50, the average price received during these years 
was $56.26. It is obvious that but for the tariff these enor- 
mous gains would have been impossible; and the magnificent 
series of blast-furnaces, into the construction of which these 
profits went, would never have been built. Of course, the rail- 
roads of the country paid the difference; but they eventually 
got it back, and more, out of the enormous tonnage of ore, coke, 
and lime needed by the furnaces. Here, however, we are 
trenching upon debatable ground ; and that is neither necessary 
nor desirable in a work of this kind, which aims only to set out 
the facts and leave the reader free to draw his own conclusions. 
During the following years, before Mr. Frick came into su- 
preme power and multiplied the Carnegie profits elevenfold in 
eleven years, the net earnings of all the properties whose his- 
tory we are tracing reached the following annual totals. The 
average price of steel rails for these years is also given. 

18S3 $1,019,233.04 $37-75 

4 1,301,180.28 30.75 

5 1,191,993.54 28.50 

6 2,925,350.08 34.50 

7 3,441,887.29 ...37.08 

8.... 1,941,555.44 29.83 

The causes of this abundant prosperity were not confined to 
the tariff, however. Some of them have been briefly adverted 
to in the course of this narrative ; others have not been men- 
tioned. A general review of this interesting division of the 
subject is therefore not out of place at this point in our story. 



CAUSES OF SUCCESS 103 

First and foremost among the causes of the extraordinary 
success of the Edgar Thomson works is the fact that they were 
planned and constructed under the immediate direction of the 
late A. L. Holley. In his day — he died in 1882 — Mr. Holley 
was the most experienced Bessemer steel man on the continent. 
It was he who negotiated the purchase of the American patents 
in 1864, and who built the experimental works at Troy. He 
developed them into a commercial success, and was in charge of 
their management until 1867. In this year he built the Har- 
risburg Bessemer plant and superintended it until 1869. Then 
he rebuilt and enlarged the Troy works, which had been de- 
stroyed by fire. He next planned the Bessemer works at Chi- 
cago. All this was before the Edgar Thomson works were even 
thought of; and so completely had he identified himself with 
the English process of steel-making and the erection of Bes- 
semer converting works, that when the Edgar Thomson scheme 
was first mooted Mr. Holley was the only man in the country 
to whom a prudent manufacturer would confide the construction 
of a new steel plant. There were, moreover, certain inventions 
and improvements of his without which no converting plant was 
complete. In a history of the Bessemer Steel Industry in 
America, Mr. Robert W. Hunt thus speaks of the Edgar Thom- 
son works : 

" In arranging these works, Mr. Holley made many improve- 
ments over any of his previous efforts, and, assisted as he was 
(by Mr. P. Barnes, resident engineer, and Mr. W. R. Jones), 
the works stand to-day as a fit monument of the progress of the 
Bessemer process in this country." * 



* It is a little singular in view of these well-known facts that Andrew 
Carnegie should claim that he " built at Pittsburg a plant for the Bessemer proc- 
ess of steel-making, which had not until then been operated in this country.'' 
Mr. Weeks, editor of the American Manufacturer, commenting on the comple- 
tion of the Edgar Thomson works remarked [September 9th, 1875]: " We [in 
Pittsburg] have been slow to take advantage of the Bessemer process, though one 
at least of the owners of the Bessemer patents for this country is a prominent 
steel manufacturer of this city [James Park, Jr.]. This dilatoriness is the more 
remarkable as there has not been the least doubt as to its success and value both 



:o4 



INSIDE FINANCIAL HISTORY 



In the schedule of cost of the Edgar Thomson works is an 
item, under patent fees, "$5,000 for Holley's Improvements," 
a sum equal to that paid for the license to use the Bessemer 

patents. This represents 
the measure of their value. 

The mechanical genius 
of Captain Jones, however, 
refused to be bound by pre- 
cedent, and many innova- 
tions were made in the 
equipment of the Edgar 
Thomson works by his force- 
ful insistence. An instance 
is here recalled : 

Captain Jones had 
ordered a certain type of 
open-topped housing for the 
rail-mill which had been 
found unworkable in other 
plants. "But, Mr. Jones," 
remonstrated Mr. Holley in 
his gentle way, "how can you justify the putting in of open- 
topped housings when you know that they tried them at the 
Lackawanna works and abandoned them ? " 

"Why," replied Jones in his positive way, "they put them 




"And why in Hades shouldn't I?' 



practically and commercially. Indeed it is to this country and to an American. 
Mr. A. L. Holley, that we are indebted for some of the most valuable inventions 
connected with the Bessemer plant, inventions that, taken in connection with those 
of the two Fritzes, have made it possible with an American plant of a given 
nominal capacity, to turn out two or three times as great a product as with the 
English. We have so often referred to the incredulous astonishment of the mem- 
bers of the British Iron and Steel Institute when Mr. Holley told them what we 
were doing in this country, that we need not repeat the statement here. 

Notwithstanding this delay in taking up this process, Pittsburg can now con- 
gratulate herself that she has as fine a Bessemer plant as the world can boast, 
not so extensive as some, but as complete and perfect as any and much more so 
than others." 



Captain WM. R, JONES 

to whose genius was principally due the first success or the 
Edgar Thomson Steel Works 



Plate V. 




SKILFUL MANAGEMENT 105 

down with three-inch round iron bolts. I'm putting mine in 
with four-inch square steel bolts. " 

" I grant you," answered Mr. Holley, "that if you put them 
in with four-inch square steel bolts you will be able to hold them." 

"And why in Hades shouldn't I put 'em in with four-inch 
steel bolts if that will accomplish what I'm after.? " 

In this way Jones was constantly making little changes and 
improvements, too insignificant to patent or even to mention 
outside of the works ; but they did much to ensure the perfect 
working of the machinery. The writer recalls one such im- 
provement. It was only a couple of pieces of old rail, shaped 
to throw the half-rolled bloom onto a moving bed as it came 
through the rolls ; but it saved the labor of a dozen men and 
did the work better. 

But greater than all of Jones' inventions was his progres- 
sive policy. Familiar with all sorts of machinery, he saw to it 
that only the best and most modern appliances were installed; 
and thereafter he was quick to adopt improvements as fast as 
they were made. The young men whom he trained ably sec- 
onded him, as is shown in the remarkable achievements of 
Julian Kennedy and Gayley at the blast-furnaces, and by Schwab 
and Scott at Homestead. The famous scrap-heap for outgrown, 
not outworn, machinery was instituted by Jones, who never hesi- 
tated to throw away a tool that had cost half a million if a bet- 
ter one became available. And as his own inventions saved the 
company a fortune every year, he was given a free hand. Under 
this greatest of all the captains of the American steel industry 
a group of younger men grew up, trained in his broad views and 
habituated to his progressive methods; so that when, in 1889, 
he was removed from his sphere of activity in a horribly tragic 
way by the explosion of one of his furnaces, there were men 
ready trained to take up his work and continue it." 



* The following passages are from a beautiful obituary notice of Captain 
Jones, written and published by the late Joseph D. Weeks, who was so well 
qualified to appreciate his genius; " He was a Captain of Industry, unsurpassed 



io6 INSIDE FINANCIAL HISTORY 

Nor can the important services of Mr. Shinn be overstated. 
As related in another place in a letter of Andrew Carnegie, his 
associates used his name as a prayer of thanksgiving every 
night before going to bed. An example of his contributions to 
the prosperity of the firm may be added to those given else- 
where in this history. 

The moulds into which the molten steel was poured out of 
the converting-vessels were at first made out of a grade of cast- 
iron which soon fractured under the extremes of temperature to 
which they were subjected. The loss from this cause at one 
time added about sixty cents to the cost of making a ton of 
steel. In going over his cost sheets one day with Captain 
Jones, to try to find some detail capable of judicious pruning, 
Mr. Shinn 's attention was arrested by the high cost of ingot- 
moulds. He thereupon worked out a metal mixture capable of 



as an organizer, marvellous in his knowledge of detail, fertile in expedients and 
invention; always planning new victories and winning them. His success is 
written in the monster establishment at Bessemer, which will remain a monument 
to his energy, his skill, his achievements. 

The position he filled was one that demanded a higher order of executive 
ability than that required of the President of the United States or any of his 
cabinet, and this fact was recognized by a salary equal to that of the President. 
As an executive officer alone he was great ; but in addition to this executive 
ability his position demanded the possession of the inventive faculty in the highest 
degree, coupled with the power of analysis on the one hand and of generalization 
on the other that are rarely found combined in any one man. He not only knew 
what he wanted done but how to do it. Never trammelled by precedent he set all 
rules at defiance if he could more surely and quickly reach the object sought by so 
doing. 

Many of the inventions of details that have made other inventions successes 
and have placed Bessemer steel-making where it is to-day are his. 

And yet after all we doubt not that the fact that would give him the most 
sincere gratification is the knowledge that he preserved in such a high degree the 
respect, the love of the thousands that were under him, and he deserved all the 
love they bear him and ail the respect they pay his memory. No one more 
honestly and with more singleness of purpose strove in every way to help and 
benefit those under him than Captain Jones. Himself from the ranks of labor, 
he never forgot the fact and looked at all questions affecting the relations of em- 
ployer and employed in the works he managed from the standpoint of both of 
these relations ; and both employer and employed have come to realize that his 
judgment was in the main wise as they have always believed it was honest." 
— American Manufacturer, October 4th, 1889. 



SPIRIT OF COMPETITION 107 

greater resistance to alternations of heat and cold, and had some 
moulds cast of this at the foundry of Macintosh & Hemphill. 
Instead of being destroyed after less than twenty heats, as here- 
tofore, the new moulds withstood the strain of sixty heats or 
more; and the ingot-mould-cost per ton of steel dropped from 
sixty to fifteen cents. On a product of 10,000 tons a month, 
the saving was over $40,000 a year — a sum almost sufficient in 
itself to determine the financial success or non-success of the 
works under ordinary conditions of trade. Nor was this all. 
The new moulds were made of Bessemer iron ; and when they 
broke they were simply passed into the converter and made into 
steel rails. 

This metal mixture was kept a secret for some years, during 
which the Edgar Thomson Company had an important advan- 
tage over competitors. After a time the secret was given to 
Leander Morris, in whom Andrew Carnegie, his cousin, had an 
interest of a peculiarly close and confidential nature. This is 
a story in itself, full of romance and pathos. Mr. Morris was a 
member of the foundry firm of Morris & Marshall, and for years 
they had a practical monopoly of the business of casting ingot- 
moulds. 

Another cause of success is to be found in the spirit of com- 
petition which animated every man about the place. A keen 
rivalry had existed from the first among the Bessemer steel 
men ; and this was intensified by the building of the Edgar 
Thomson works, with all the improvements resulting from Mr. 
Holley's ten years of experiments. Captain Jones has graphi- 
cally told the story of this rivalry in the paper already referred 
to, which was read* at the meeting of the British Iron and Steel 
Institute in May, 1 88 1. He says : 

" Now as to the cause of the great output of American steel 
works. 

On the introduction of the Bessemer process in America, 
quite a number of young men, who believed that the process 
would revolutionize the metallurgical world, became anxious to 



io8 INSIDE FINANCIAL HISTORY 

identify themselves with its development. At the Troy works, 
which may be considered the pioneer Bessemer works of the 
country, Mr. A. L. Holley was applying his brilliant talents to 
the perfecting of American plants. Forsythe, of the North 
Chicago works, was also assiduously studying the process. A 
few years later the Pennsylvania Steel Works, the model of 
nearly all the subsequent American works, were constructed by 
Mr. Holley. Some years later still the Cambria works were 
built. At all these works there were ambitious young men 
closely studying and carefully watching all possible points of 
development. 

From the Cambria graduated Mr. R. W. Hunt, general 
superintendent of the Albany and Rensselaer works; Jones 
and Fry, at present connected with the Cambria ; Rinard, of the 
Edgar Thomson ; Stanton, of the Vulcan ; Williams, of the new 
Pittsburg Bessemer works ; and myself. 

Mr. Holley, as editor of Van Nostrand's Eclectic Magazine y 
a few years ago, records as follows : 'We have information from 
the (Penn.) steel works that on Tuesday of last week they had 
succeeded in making eight blows or conversions in ten hours. ' 
I quote from memory. 

Soon the Cambria Iron Works commenced to creep up to 
thirty-six heats or about one hundred and sixty tons in twenty- 
four hours. After the dispersion at the Cambria works attend- 
ant on the death of Mr. George Fritz, one of the ablest of Amer- 
ican metallurgists, Mr. Hunt assumed control of the Bessemer 
department of the Cambria works. A strong rivalry imme- 
diately commenced between these two gentlemen ; and great was 
my astonishment at this time on receiving from Mr. Hunt a 
telegram stating that 'in the last twenty-four hours we have 
made fifty heats, or about two hundred and fifty tons.' This 
achievement caused great surprise in the Bessemer world. In 
the meantime Forsythe, having concluded his studies at Troy, 
had assumed the reins at North Chicago ; and reports soon cir- 
culated about what he was doing there. This only stirred up 
Messrs. Fry and Hunt and Liebert, of Bethlehem, to greater 
achievements ; and so the product kept on increasing, while 
zve of the Edgar Thomson zvere compelled {being engaged in erect- 
ing the works) to listen to their wonderful stories. In 1875 the 
Edgar Thomson began operations, followed soon afterwards by 
the Scranton and Vulcan works, while the Joliet works under 
an efficient organization had again entered the field. 

In the latter year the output of American works began to 
assume those proportions which have caused so much surprise 



CAPTAIN JONES' EXPLANATION 109 

in England. The output soon reached 1,500 tons of ingots a 
week, then 1,800 tons, then 2,o(3o tons, and ultimately increas- 
ing to 3,000, 3,100, 3,200, and 3,300. 

I am frequently asked by people, 'Where will you Bessemer 
men stop.-* ' and 'What is the limit of your production.? ' lean 
only reply : 'Ask some one who knows more about it than I do.' 
But I really believe we are on the verge of the elastic limit of 
production, although it may yet reach a product of 14,500 to 
15,000 tons for what I term a 'long month ' of twenty-one days 
per pair of converters. [Julian Kennedy afterwards brought the 
record to over 19,500 tons.] 

The output of American works is governed by the facili- 
ties for getting the ingots out of the road. This is the sticking- 
point just now. [This difficulty was met by casting the ingots 
on trucks and hauling them away by locomotives.] Therefore 
the works that cast their tonnage in the least number of moulds 
have a decided advantage in reaching the ultimate production of 
the present American or Holley plant. The race, so far as the 
Edgar Thomson works are concerned, will soon cease. A few 
months more and the Edgar Thomson will change from a two 
seven-ton converter plant to a three ten-ton plant, and then our 
efforts will be concentrated upon keeping pace with the Bethle- 
hem four-vessel plant, and with the North Chicago and Pennsyl- 
vania Steel Company's three-vessel plants.^ 

Next to the strong but pleasant rivalry of the young men 
who have assumed control of the works, and who have worked 
hard and faithfully to excel, the development of American prac- 
tice is due to the esprit de corps of the workmen after they get 
fairly warmed to the work. As long as the record made by the 
works stands the first, so long are they content to labor at a 
moderate rate ; but let it be known that some rival establish- 
ment has beaten that record, and then there is no content until 
the rival's record is eclipsed. 

Another marked advantage which the American works 
have is the diversity of nationality of the workmen. We have 



* One day in November, 1891, the mill started out to beat the best day's 
record of the South Chicago mill of the Illinois Steel Company, which was 1,700 
tons. The attempt was a remarkable success, as the following figures show : 

Rails made in twenty-four hours 1,924 tons. 

Ingots, same time 2,074 " 

Best twelve hours (night turn) rails 981 " 

'* ** ingots 1,087 " 

r.f'st run two hours 201 " 



no INSIDE FINANCIAL HISTORY 

representatives from England, Ireland, Scotland, Wales, and all 
parts of Germany, Swedes, Hungarians, and a few French and 
Italians, with a small percentage of colored workmen. This 
mixture of races and languages seems to give the best results, 
and is, I think, far better than a preponderance of one nation- 
ality. 

In increasing the output of these works, I soon discovered 
it was entirely out of the question to expect human flesh and 
blood to labor incessantly for twelve hours, and therefore it was 
decided to put on three turns, reducing the hours of labor to 
eight. This proved to be of immense advantage to both the 
company and the workmen, the latter now earning more in eight 
hours than they formerly did in twelve hours, while the men can 
work harder constantly for eight hours, having sixteen hours 
for rest. 

Another important matter connected with fast working is 
the maintenance of the machinery. As fast as the weak parts 
in the machinery are developed they are strengthened. In all 
new machinery the aim is to get an excess of strength ; the 
usual factor of safety in new rolling machinery is. not allowable. 
The machinery must be made extra heavy and strong, so that 
the inertia of the mass will swallow all strains thrown upon it." * 

Following in importance the protective tariff, the mechani- 
cal excellence of the works, the inventive skill of its managers, 
and the rivalry of competing plants, as factors in the extraordi- 
nary success of the Edgar Thomson Steel Company, come cer- 
tain personal influences. These were subtle and vague, and not 
easily traceable except in results which were rarely visible to 
outsiders. As a consequence, biographers and historians have^ 
been led into all sorts of fanciful conceits concerning the rela- 
tive importance of some of the individuals connected with the 
concern. 

One closely associated with the group, being asked to define 
the functions of the various partners in the Edgar Thomson 
Company, recently made the following trite comparison : " Shinn 
bossed the show; McCandless lent it dignity and standing; 



* Which recalls Captain Jones' remaric to iiolley on the advantage of heavy 
steel bolts to hold the housings of the rail-mill. 



A NAPPY SIMILE 



Phipps took in the pennies at the gate and kept the pay-roll 
down; Tom Carnegie kept everybody in a good humor, with- 
Dave Stewart as his understudy." " And Andrew Carnegie ? " 
he was asked. " Oh, Andy looked after the advertising and 
drove the band wagon ! " was the ready reply. 

With due allowance for its humorous exaggeration, this 
blunt comparison fairly represents the facts. The high com- 
mercial and social standing of Mr. McCandless not only gave 
dignity to the enterprise, but won financial support for it in its 
days of need. Without him, the 
company would hardly have tided 

over the troublous times of 1873 ' 

and the lean years following the fl^ 

panic. The special capacity of Mr. 
Phipps has been abundantly illus- 
trated in connection with 
preceding enterprises. Mr. 
T. M. Carnegie's abilities 
were too numerous and 
complex to be summed up 
in a sentence. He was a 
man of sterling integrity; 
and it was a common say- 
ing in Pittsburg that his 

word was better than some men's bond. He had remarkable 
judgment; and his opinion on commercial questions was valued 
above that of much older and more experienced men. Quick 
and keen in his perceptions, cautious but progressive in his 
ideas, faithful to his engagements, and just in all his dealings, 
he gave to his company that which corporations are habitually 
lacking, namely, a conscience. His death in 1886, at the early 
age of forty-three, was a loss not only to his associates, but to 
the whole business world of Pittsburg. To this day all who 
knew him, great and small, rich and poor, workman and master, 
revere his memory and regret his loss. Mr. Stewart never 




■•'Andy drove the band wagon." 



112 



INSIDE FINANCIAL HISTORY 




sought prominence, and was content to the day of his death, in 
1889, to merge his own personality in the organization he worked 
for. Devoted to Tom Carnegie, he allowed no personal injury to 
affect his loyalty to his friend; and more than once he stoically 
accepted the rough rebukes of the elder Carnegie because Tom 
wished for peace. Once, indeed, exasperated at the gibes given 
at his own table, he rose in anger, saying that the bounds of all 
reason had been reached and the laws of hospitality outraged ; 

but the apology which Tom arranged 
was at once accepted and peace was 
restored. 

The part at first selected by An- 
drew Carnegie for himself was the 
development of outside trade and 
the procurement of orders. Here he 
displayed an originality so marked 
that it amounted to gen- 
/ ^^k ^^^^' Endowed with a 

ready wit, an excellent 
memory for stories, and 
a natural gift for reciting 
them, he became a social 
favorite in New York 
and Washington, and 
never missed a chance to 
make a useful acquaint- 
ance. His mental alert- 
ness, ready speech, and enthusiastic temperament made him 
a delightful addition to a dinner party; and many an uncon- 
scious hostess, opening her doors to the little Scotchman from 
Pittsburg, has also paved the way to a sale of railroad material. 
Carnegie early found that his power to promote sales grew in 
proportion to his own importance. His natural love of promi- 
nence was thus fortified by its commercial value ; and he lost no 
opportunity of adding to his interest in the firm. As a result 



\ 



\ 




"An unconscious hostess. 



UNFRIENDLY RIVALRIES 113 

he was soon regarded as the^ sole founder and builder of 
the enterprise which bore his name, and his partners, if 
thought of at all, were ranked with the other machinery of the 
works. 

At first Andrew Carnegie's attention was principally occu- 
pied in schemes of his own — construction companies for new 
railroads and bridges, and the marketing of bonds. But as the 
iron businesses in which he was financially interested grew in 
importance, he gave them more of his time and attention. Re- 
lieved of the routine of detail and the never-ending cares of 
management which were his partners' daily lot, he had a mind 
free to range over the industrial field, picking up scraps of 
information concerning the requirements of railroads, and bring- 
ing news of many a large contract. Supplied with daily reports 
of the product of every department of each of the works, he had 
leisure to make comparisons, and to prod with a sarcastic note 
any partner or superintendent whose work did not rank with the 
best. In time he became very expert at these postal proddings ; 
and with half-a-dozen scathing words scribbled on the back of 
his address card, he could spur the best of his managers to still 
more heroic achievements. Captain Jones, who was too high- 
spirited a war-horse to brook such spurrings, sent in his resigna- 
tion with almost rhythmical periodicity, and was then tempted 
back into harness by a handsome gift and still handsomer apol- 
ogy. As he put his head into the halter again, he would fling 
a gibe at the other managers who took their rowellings more 
tamely. " Puppy dog number three," he would say in sarcastic 
parody of the scribblings from New York, *'you have been 
beaten by puppy dog number two on fuel. Puppy dog number 
two, you are higher on labor than puppy dog number one." 
And so on. This was the lighter side of the system of un- 
friendly competition which Andrew Carnegie originated and fos- 
tered. Some of these managers and partners did not speak to 
each other for years, so skilfully were their jealousies and rival- 
ries played upon ; and there was hardly a man at the head of 
8 



114 INSIDE FINANCIAL HISTORY 

any department of the Carnegie concerns whose flanks were not 
ripped open in the fierce race for supremacy. Some, like Cole- 
man, Shinn, Scott, Griffin, Kennedy, Abbot, and Walker, re- 
volted and flung back the taunts with interest. Others let their 
anger be transmuted into fresh energy and a determination to 
win. These are the ones who remained and became ''young 
geniuses. " 

" You cannot imagine the abounding sense of freedom and 
relief I experience as soon as I get on board a steamer and sail 
past Sandy Hook," once said Andrew Carnegie to Captain 



"Carnegie did not roost in the tree. . . . He would 
sit afar off, on the rail-fence, apparently idly watching- 
the spaders and waterers and trimmers and caterpillar- 
killers, all desperately at work, with the sweat stream- 
ing. Presently he would descend from his rail-perch, 
catch up a great club and lay frantically about him. 
Bruised skulls here ; broken skulls there ; corpses 
yonder ; fellows with raw heads and aching bones, 
crawling rapidly into the cover of the tall grass ; im- 
precations filling the air. A scene of peaceful industry 
transformed into a shambles. Grinning grimly at his 
club, Carnegie would stroll back to his rail-perch, 
usually Skibo."— " r/i^ Alen who Made the Steel Trust,'' by 
David Graham Phillips. 



Jones. '' My God, think of the relief to us ! " exclaimed Jones 
with his usual bluntness. The retort was not all in jest. 

In his social campaign Andrew Carnegie did not neglect the 
quest for political influence. The Government brooded lov- 
ingly over the industries which paid their owners fifty to a hun- 
dred per cent, per annum ; and there is a law of political equiva- 
lents which Mr. Carnegie never ignored. The leaders of both 
parties became his intimate friends ; and liberal subscriptions to 
their respective campaign funds justified his reliance on their 
favor. ''How would you like to invest ^10,000 in the sena- 
torial fight in ? " wrote James G. Blaine in 1886. As the 



-A BAND OF DEVOTF.D FRIENDS'' 115 

Keystone Bridge Company had an uncollectable account of 
some $200,000 against one of the junior American republics 
for a steel building at the New Orleans Exposition, Mr. Carne- 
gie was glad to make the investment ; and the friendly offices of 
the State Department secured an early settlement of the claim. 
No one had more faith than Carnegie in the helpful effect of a 
congratulatory telegram to a president-elect or a new senator; 
nor did ever a Scotchman better gauge the trade possibilities 
of a dinner at which Western congressmen might meet the 
great ones of earth in literature and philosophy. Never was 



" My partners are not only partners, but a band of 
devoted friends, who never have a diiference. I have 
never had to exercise my power, and of this I am very 
proud." 

" I never enjoyed anything* more than to get a sound 
thrashing- in an argument at the hands of these young 
geniuses." 

"When I could not bring my associates in business 
to my views by reason I have never wished to do so 
by force. As for instructing or compelling them under 
the law to do one thing or another, that is simply ab- 
surd. I could not if I would, and I would not if I 
could." — Andrew CartJei^ie. 



band wagon driven with such skill. The box of Carnegie's 
chariot became the "seats of the mighty." Herbert Spencer's 
acquaintance was made on board a transatlantic liner, as was 
that of sundry British peers ; and the visits of these personages 
to the Pittsburg works were reported in a thousand newspa- 
pers from Maine to California and from Land's End to John 
O'Groats. 

And so a politico-social campaign went on hand in hand 
with the rail, bridge, armor-plate, and structural-steel business, 
through seasons of opera, concerts, lecturings, and book-publish- 
ings, until the name Carnegie was written in bright letters 



Ii6 



INSIDE FINANCIAL HISTORY 



across the sky of two hemispheres, and people forgot that there 
were any other steel works in the world. 

Meanwhile in Pittsburg the partners worked steadily on, 
building dollar by dollar the great golden pyramid by which 
their majority stockholder was to be immortalized. 




oLcel works by night. 



,li' tjj S. S. McClure Cu. 




CHAPTER VIII 

QUARRELS AND EJECTURES 

DESPITE this great and uninterrupted good 
fortune, the internal discord in which all 
the Carnegie enterprises were born and 
brought up continued without abatement, 
and wrought many changes in the person- 
nel of the organization. Ranking with 
other evolutionary factors in the development of the business, 
and more influential than any in stamping it with the Carnegie 
personality, these disagreements are deserving of a more than 
passing reference. 

At the organization of the steel company, Andrew Carne- 
gie's interest was one-third of the whole; but it appears from 
a printed statement of Mr. Shinn that he early developed " a 
sentimental desire to have an even half." This he got, and 
more, as one by one the founders of the organization dropped 
away from it. 

The first to go was Mr. Coleman ; and his interest was 
bought by Mr. Carnegie "after a bitter quarrel between them," 
to quote from a letter addressed to the author by one of the old 
members of the corporation. Before its purchase, however, 
Andrew Carnegie repeatedly speaks of this Coleman interest as 
a desirable acquisition. In the letter of April 13th, 1876, now 
before me, immediately following the exclamation quoted, 
" Where is there such a business ! " he goes on to say : 

" I want to buy Mr. Coleman out & hope to do so. — Kloman 
will have to give up his interest. These divided between Tom, 
Harry You and I would make the Concern a close Corporation 
Mr. Scott^ loan is no doubt in some Bankers hands & may also 

117 



ii8 QUARRELS AND EJECTURES 

be dealt with after a little then we are right & have only 

to watch the Bond conversions." 

^fXrt/ dLf':n^ /Ul^c^JjC^ A^fi^^^^^su f^\j3-^ e^*..^ yC^^fLuj^ 

aU^ C^yjJ^ ^ Oi^i^^t.*.^ i^^^Jl^l^ - ^aZ^ t^ix>K^ /s^ Ou^ 

'^jt^i-^^^-^^c^^ ^tU^ A-<ww«_ ^/Cx^ n^ ^^ *^^-^^SZi>^^ 

Photographic reproduction of a letter written by Andrew Carnegie on April 13th, 
1876, in which he outlines plans for the purchase of partners' interests. 

In a letter written a little earlier he mentions the easy terms 
on which he hoped to acquire the Coleman interest : 

" Yesterday in talking with Mr Coleman ... I said I 
would be willing to take his 100.000$ stock 5 years at Par 6^0 
int pr ann payable semi annually principal payable after 5 
years in i 2 & 3 years say — He wanted much better bargain 
but I would do no better finally he said to write Tom what I 
offered & he would talk over it I suppose it will be arranged." 

And so it was. At the same time disagreements arose 
among the other members of the firm, growing out of the price 



A SCHEiME OF ELIMINATION 119 

to be paid the Lucy Furnace Company for pig-iron ; and Messrs. 
T. M. Carnegie and Phipps sokHialf of their stock in the Edgar 
Thomson to Andrew Carnegie, refusing to engage in the erec- 
tion of a second Lucy stack unless he bought it. The dispute 
concerning pig-iron was finally settled by a sliding scale follow- 
ing the prices of rails ; but before long fresh troubles arose 
through the inferior quality of the Lucy product. On April 
27th, 1877, Mr. Shinn, general manager, in a letter marked 
" private and confidential," wrote to Andrew Carnegie as follows : 

" Another matter comes up in this connection for most seri- 
ous consideration. It is this. If the L. F. Co. is to furnish 
us the most, or all of, our metal, it is of the utmost consequence 
that we should have the fullest confidence in each other, and 
that we could feel assured at all times, that no material would 
be used to cheapen the metal, that would or could injure our 
product. That the cinder used last year did this I am very well 
satisfied ; and when Mr. Phipps assured me in January last that 
no cinder was being used, and that no change would be made 
without consulting or advising us, I felt easy; but we have had 
some 'split ends' among our Lake Shore rails and now comes 
the (to me) painful rumor that cinder is being used. You are 
most interested in our getting and keeping a reputation for 
making the best rails in America, and to do that we must use 
the best material. My reputation, as well as my capital, is in- 
volved in the matter, and if I am to make it my life occupation, 
and cut loose from all RR. associations, it can only be, as you 
can readily see, upon a basis of full confidence between us, and 
between us all as associates, in all our relations." 

The difficulties thus arising, joined no doubt to the ever- 
increasing output of the steel works, developed in the partners 
of the Edgar Thomson Company not interested in the Lucy 
furnaces a determination to make their own pig-iron. And 
thus it came about that the Edgar Thomson people erected 
their own blast-furnaces and inaugurated a new era in iron- 
making. But the cabal resulting from these disagreements 
precipitated the " ejecture " of those who were most strenuous 
in their opposition to the Lucy Company having any undue ad- 
vantage through their connections with the Edgar Thomson. 



I20 QUARRELS AND EJECTURES 

The next one to go out was Andrew Kloman, under circum- 
stances already related. He had an interest of ;^$ 0,000 in the 
Edgar Thomson, which Andrew Carnegie acquired. 

Then came the little fellows who held the convertible bonds 
and wanted stock for them. To these Andrew Carnegie was 
frank enough to say that they were not wanted and that their 
most profitable course would be to quietly take back their money 
and get out. The privilege of conversion was highly valued 
when these bonds were sold, because it gave their holders a 
speculative chance of becoming permanently interested in the 
concern if it proved successful, and if not they still held a lien 
on a property that had cost three times the sum of their mort- 
gage. But the privilege was disputed; and in most cases the 
bondholders chose to accept their money rather than go into 
litigation with the now powerful corporation. Young Gardiner 
M. McCandless, however, insisted on his rights. He was reluc- 
tantly admitted to the firm, and became Carnegie's secretary. 

Colonel Scott and Andrew Carnegie had a timely quarrel, 
and the former took back his money, declaring that nothing 
would induce him to become permanently interested in the 
Edgar Thomson. As for Mr. J. Edgar Thomson, he died be- 
fore the bonds matured, and his executors also waived their 
rights and accepted cash in discharge of the obligation. 

The other partners included in the scheme of elimination 
were under a surveillance which they little suspected. Some 
of them had engaged in a disastrous stock speculation, which 
Andrew Carnegie, referring to Mr. McCandless' share in it, 
characterized in one of his letters as " miserable conduct," and 
hinted at certain changes he had long had in mind. But before 
this he wrote to Mr. Shinn (May ist, 1877) : 

" There are possible Combinations in the future 

It is n't likely McCandless Scott & Stewart will remain 

with us. I scarcely think they can — I know Harry & Tom 

have agreed with me that you out of the entire lot would be 

wanted as a future partner & I think we will one day make it a 



DEATH OF McCANDLESS 



21 



partnership Lucy F Co U Mills, E T &c & go it on that basis 
the largest and strongest Concerti in the Country." 

Mr. McCandless, however, was eliminated by the kindly 
hand of death; and Andrew Carnegie's grief was intense and 
profound. Writing from Bombay on February 22d, 1879, where 
he heard the sad news, he says : 

" It does seem too hard to bear, but we must bite the lip & 
go forward I suppose assuming indifference — but I am sure none 




DAVID McCANDLESS, 
First Chairman of the Edgar Thomson Steel Company. 



of US can ever efface from our memories the image of our dear, 
generous, gentle & unselfish friend — To the day I die I know 
I shall never be able to think of him without a stinging pain at 
the heart — His death robs my life of one of its chief pleasures, 
but it must be borne, only let us take from his loss one lesson 
as the best tribute to his memory, let us try to be as kind and 



122 QUARRELS AND EJECTURES 

devoted to each other as he was to us. He was a model for all 
of us to follow One thing more we can do — attend to his 
affairs & get them right that Mrs. McCandless & Helen may be 
provided for — I know you will all be looking after this & you 
know how anxious I shall be to cooperate with you." 

The partners accordingly carried Mr. McCandless' interest 
undisturbed until Mr. Carnegie's return the following summer. 
The great profits made during this period have been adverted to, 
as well as Carnegie's joy on Mount Etna or some such elevation. 
Despite this, he insisted on the purchase of Mr. McCandless' 
interest at the book value shown by the appraisement made be- 
fore Mr. McCandless' death. The member of the old corpora- 
tion previously quoted writes me : 

" But this decision was not made until late in July follow- 
ing, after Mr. Andrew Carnegie's return from his trip around 
the world, when large profits had been made and still larger 
were shown by the orders entered on the books for delivery dur- 
ing the following nine months. . . . Legally the company acted 
fairly." 

No share of these profits was included in the price paid to 
Mrs. McCandless, and she only received some ^90,000 for her 
husband's interest. It had cost ^65,000 in cash. 

Mr. Shinn was the next to go out of the concern; and the 
story of his leave-taking found its way into the courts. When 
Mr. McCandless died, Mr. Shinn expected to be made chairman 
in his place. He was the largest stockholder after the elder 
Carnegie; and as he had done much to make the business a suc- 
cess, he felt that his services and interest entitled him to the 
most honorable position in the company. But Carnegie, who 
controlled the board, had left orders before leaving on his trip, 
that in the event of a vacancy in the chair his brother was to 
be elected to fill it. This was accordingly done, Shinn protest- 
ing by letter to Carnegie in Egypt, and plainly setting forth his 
claims and disappointment. Carnegie replied, urging Shinn to 
" let the matter rest until my return, & we will meet as friends 



THE FIGHT WITH SHINN 123 

desirous of pleasing each other, & I am sure our happy family 
will remain one. " 

Shinn's claim was a reasonable one, judged in the light of 
the letters he had received from Carnegie. 

" Remember I can see no fault with your management as it 
is," Carnegie wrote him in August, 1876. 

" On the contrary I assure you there are few nights in which 
before sleeping I dont congratulate myself at our good fortune 
in having you there — Tom and Harry ditto — but we dont think 
we can have too much of *so good a thing ' & want somehow or 
other to get you root & branch," 



^-yU^^y^^i 









r ^ ^ ^ 

^^^^rC:^^ . • ^l a^ ^ ^ "^^r ^ ^ 

Photographic reproduction of part of a letter from Andrew Carnegie to William P. 

Shinn. 

Again : 

" I like the tone of your personal letter. Much — Have al- 
wn\s known you would find it necessary — if E. T. proved what 



124 QUARRELS AND EJECTURES 

we expected — to give it all your time and thought — It is a 
Grand Concern & sure to make us all a fortune. — With you at 
the helm, & my pulling an oar outside, we are bound to put it 
at the head of rail making concerns — 

My preference would be for you to double your interest & 
manage it to the exclusion of everything else — we to carry the 
second 50.000;^ until you could pay it & allow you to draw on a/c 
profits any sum required for expenses, but this shall be as you 
prefer. — We shall not quarrel about Your Compensation " — "^ 

Accordingly Shinn had resigned his position on the rail- 
roads, had bought a part of the Coleman interest, and was now 
giving his whole time to the management of the Edgar Thom- 
son works. 

On the elder Carnegie's return, however, the chairmanship 
was permanently vested in his brother Tom. 

Meanwhile other matters of dispute had arisen between 
Shinn and his colleagues which had become the subject of out- 
side gossip and comment; so that the slight was doubly felt by 
him, and he sent in his resignation. In his letter of withdrawal 
from the management of the company, dated September 13th, 
1879, he says : 

*' I have full confidence in the pecuniary success of the E. T. 
S. Co. Limited and purpose to remain your business associate; 
and it will be my desire, as it will be my interest, to advance 
its success by any and all means in my power. " 

This, however, did not accord with Carnegie's plans, nor 
with the policy, now first inaugurated, that no officer of the 
company should retain his interest after he had resigned his 
office ; and a committee was appointed by the Board of Managers 
to confer with Mr. Shinn about the purchase of his interest. 
This committee consisted of John Scott and Andrew Carnegie. 
The former has reduced his statement of the transaction to 
writing. It is as follows : 



*In this and other Carnegie letters the spelling and punctuation of the 
originals are preserved. 



WILLIAM P. SHINN 

First Manager of the Ed^ar Thomson Steel W^orks 



Plate VI, 




''MALICIOUS MENDACITY'' 125 

''In the month of September 1879, the latter part of the 
month, the E. T. Board met anctaccepted the resignation of Mr. 
Shinn. At the meeting the board appointed Mr. Carnegie and 
myself to confer with Mr. Shinn about the purchase of his in- 
terest in the Company. After the board adjourned Messrs. 
Carnegie, Shinn and myself remained, the others having retired. 
Mr. Shinn then proposed to sell his whole interest for a certain 
sum, the amount I have forgotten. Mr. Carnegie refused to 
recognize that the stock in dispute had any value to him. Mr. 
Carnegie offered Mr. Shinn on behalf of the K. T. Co. one hun- 
dred and five thousand dollars for his interest standing in his 
name on the books of the Company, which offer Mr. Shinn de- 
clined. Some time during the interview Mr. Carnegie made the 
remark that he would rather have given one hundred thousand 
dollars than have Mr. Shinn leave. 

The next day when the board were about ready to meet, 
knowing Mr. Shinn was at the office of F. Wayne Co. I went 
up to see Mr. Shinn and urged him to accept the offer of $105,- 
000 which had been made him the day previous by Mr. Carne- 
gie. At my earnest solicitation Mr. Shinn finally gave his con- 
sent to accept the offer. Mr. Shinn shortly after came down to 
the Edgar Thomson office and asked Mr. Carnegie and myself 
to come out into the hall. Mr. Shinn then stated to Mr. Car- 
negie and myself, that he was willing to accept the offer of 
$105,000 whenever they could agree on a satisfactory agreement 
to refer the question of the stock in dispute to arbitrate. This 
being reported to the board, they authorized the officers to close 
the purchase. The board did not make the condition for the 
agreement to arbitrate, that having been done by Mr. Shinn." 

The agreement to arbitrate here referred to concerned the 
right and title of Mr. Shinn to the stock which Andrew Carne- 
gie had sold him out of that which he had bought from Messrs. 
Coleman, Phipps, and T. M. Carnegie. It was a full share of 
$50,000. Mr. Carnegie denied Shinn's right to this stock and 
the premium to which it had advanced, on the ground that part 
of the consideration Shinn had agreed to pay for it was that he 
would remain general manager of the works as long as Mr. Car- 
negie wanted him. Shinn indignantly repudiated such an un- 
derstanding, which he characterized as " slavery ; " and the mat- 
ter was submitted by agreement to the arbitrament of Messrs. 



126 QUARRELS AND EJECTURES 

B. F. Jones, John W. Chalfant, and William Thaw, prominent 
business men of Pittsburg. 

The documents in the case assumed voluminous proportions, 
as the disputants brought charge and countercharge against each 
other; and some of them became almost virulent in character. 
Andrew Carnegie injected into his statement of the case charges 
against Shinn and his friends amounting to conspiracy to de- 
fraud; but unfortunately he entered into irrelevant details and 
tripped up on his facts. The most singular of the lapses of 
memory by which his case was injured was contained in the 
following statement to the arbitrators : 

" When in India I was rendered anxious by receiving a tele- 
gram from him [Shinn] asking me to get an important letter at 
Aden, and reply by telegraph. You can imagine what thoughts 
arose. The most probable emergency that suggested itself to 
my mind was that some important financial question had arisen, 
and that it was necessary parties should receive my personal 
guarantee in some way, and at once. It was several weeks be- 
fore I could obtain the expected letter, and judge my surprise, 
nay rather indignation, when the document proved to be five 
closely written pages in Mr. Shinn's own handwriting, setting 
forth his personal disappointment and dissatisfaction at the 
board of managers not having seen fit to promote him to the 
chairmanship, in place of our late lamented friend Mr. McCand- 
less, I was requested to telegraph a reply, instructing the board 
to undo its action. Instead of this, I wrote an indignant answer, 
but as there were many days before the mail left, I had time to 
reflect, and finally destroyed the letter, and sent instead a short 
note asking him to await my return." 

Shinn's answer, for a few pages, was a clever piece of judi- 
cial reasoning; but having been accused in no equivocal terms 
of dishonorable and contemptible practices, he later allowed 
himself the free use of his somewhat caustic pen, and marred 
his otherwise able presentation of the case by charging his 
opponent with " wilful and malicious mendacity. " 

"In regard to his [A. C.'s] statements," he says, "it may 
well be said as has been said of a much more prominent person. 



SHINN ''ON TRIAL'' 127 

* Where most people remember, his lordship fancies, and in his 
case what is most convenient naturally offers itself. This has 
very much increased his brilliancy, for the process leaves its 
practicer utterly unhampered. But nobody should ask for both 
strict accuracy and Lord B.'s quick free wit. It is demanding 
an unreasonal3le combination.' So much on the 'go-as-you- 
please ' style is Mr. Carnegie's historical account of our transac- 
tions, that the above quotation is unavoidably suggested. . . . 

Mr. Carnegie refers to a telegram which he received in 
India, asking him to get an important letter at Aden, and reply 
by telegraph, and tells you of his emotions when he re- 
ceived it. 

I sent no such telegram to Mr. Carnegie while he was in 
India, nor indeed was any such telegram sent him at any time. 
The letter he refers to was written to him Feb. 22nd, 1879, ad- 
dressed to him at Aden, which was the address he gave for let- 
ters to be sent at that date. The author of * Around the World ' 
says : * Bombay, Monday, Feb. 24th, We sailed at six in the 
evening by the splendid P. and O. steamer, Pckin,' that being 
the date he left India. On March 12th we received a telegram 
from him dated Cairo, Egypt, and on that date I telegraphed him 
as follows : — 

Carnegie, Cairo. Bison, Cling, Black, Cloak, Angel, Feb. 
22nd, Aden, Bacon, telegraph and mail. Shinn. 

The first four words related to our profits in Jan. and Feb., 
the balance is translated thus : Angel. Have you received our 
letter of Feb. 22nd, Aden? Bacon. Where shall we address 
you, telegraph and mail .? 

Not one word, as you will see, about answering by tele- 
graph, or about letter being important, and sent sixteen days 
after he left India. 

But you would expect a matter which caused him so much 
anxiety as he alleges to be mentioned in his letters, and what 
does he say.-* 

In his letter dated Bombay, Feb. 22nd, he does not mention 
it, for the good reason that he knew nothing of it. In his letter 
dated Sorrento, March 23rd, the first received after he got the 
telegram, he writes, 

*I expected your Aden letter to-day, but next mail will 
undoubtedly bring it, reaching me at Naples, Wednesday even- 
ing on our arrival.' 

In his next, dated Rome, March 29th, he says: — 

* Yours from Aden not yet received although I ordered it 
here. May come Tuesday, when I will telegraph.' 



128 QUARRELS AND EJECTURES 

You find no trace of anxiety or other deep emotion in these 
letters. . . . 

To complete the record I inclose my pressed copy of the 
Aden letter which instead of 'five closely written pages,' con- 
sists of tivo closely written and one-half page, not very close. 
In it you will look in vain for any request to telegraph a reply. 
In fact the whole of these emotions over the Aden letter seem 
to be a case of 'reflex action ' excited by the claim in contro- 
versy. 

You will note in his reply to the Aden letter that he says : 
' Let the matter rest until my return and we will meet as friends 
desirous of pleasing each other, and I am sure our happy 
family will remain one.' This was his 'indignation ' referred 
to. 

He has told you how we 'met as friends ' in the first con- 
versation we had on the subject, when he says : 'And upon my 
return and before any question of this claim arose, I told him I 
had twice already bought his life work,' etc. ; he also insulted 
me still further by telling me, in reference to the increase of 
salary voted me unanimously by the Board, 'You might as well 
have put your hand in my pocket and taken out ^750 ' (his half 
of it). 

On the same d,ay he told another person who subsequently 
informed me that he 'hoped most sincerely he (I) would resign 
his (my) connection with the E. T. Steel Co., Limited, as he 
was determined to get rid of him ' (me), and later on, in the same 
conversation, he said I had better resign now, as he would make 
it so warm for me that he would have my resignation before 
Christmas. (Sworn evidence of this statement can be had if 
desired by the arbitrators.) 

Without further conversation with, or notice to me, at a 
meeting of the Board of Managers held late in July, at which he 
had no official standing or right (not being a member), he in- 
sultingly demanded my resignation as Treasurer, under the false 
pretence that I had myself suggested it in my Aden letter, 
which pretence he repeats in his statement to you. . . . 

He thus took from me, as by violence, the responsible and 
honorable office of Treasurer, which I had held since the forma- 
tion of the company and now comes before you asking 'equity,' 
alleging that I left the company without his consent. 

I myself saw a letter in his handwriting, in which he said, 
referring to me byname: — 'Thank God his name is off our 
paper,' and 'Mr. Shinn is on trial,' etc. 

Under these circumstances you will not wonder that I left 



CHARGES OF CONSPIRACY 129 

Mr. Carnegie's company, and I do not therefore feel called upon 
to reply to his history of my departure." 

To all this Carnegie retorted in kind, becoming if possible 
more offensive than before in his charges of conspiracy, 

" In a very short time," he says, " the Edgar Thomson 
Company would have been fleeced upon most of its supplies. 
With the railway manager bribed and the purchaser of our 
supplies interested, the combination seemed complete, and does 
credit to the genius of our late general manager." 

This ended for the time being the effort at a "peaceful " 
settlement, for Shinn angrily revoked his agreement to arbitrate 
and withdrew all the papers. On the same day he tendered 
the purchase-money of the stock in dispute, and brought suit in 
the Allegheny County Court. Carnegie then petitioned for 
removal of the case to the United States Circuit Court, which 
was granted ; and Shinn in his turn secured an order of court 
for the production of the Edgar Thomson books. For obvious 
reasons this was a measure distasteful in the highest degree to 
the Carnegies; and when the case was called for trial on June 
1 6th, 1 88 1, an adjournment was asked for an hour. The law- 
yers then got together in an adjoining room and patched up 
another agreement to arbitrate. The case was thereupon sub- 
mitted to the same arbitrators as before on the old pleadings, 
subject, however, to a re-statement of Shinn's claim on the 
question of value, and leaving that question wholly to the arbi- 
trators free from the restrictions of the original submission, 
which limited the premium to fifty per cent. This was an im- 
portant gain for Shinn, since it left to arbitration the question 
of Shinn's right to participate in the enormous increase in value 
which the stock had undergone during the previous two years. 

The exact terms of the award were long kept secret ; but it is 
betraying no confidence to state now that Shinn won on the 
main issue and received his full claim with a substantial pre- 
mium representing the increased value of his stock. It was just 
under $200,000. But he lost his contention that he could re- 
9 



I30 QUARRELS AND EJECTURES 

main a member of the corporation after he had accepted service 
with a competing concern. 

The pleadings and answers in the civil suit were withdrawn 
from the court files, so that to-day there is nothing in the 
official archives but the most meagre record of the case. 

The next " ejecture " was that of John Scott, in 1882. Like 
so many others before and since, it was the outgrowth of per- 
sonal difficulties with Andrew Carnegie. Mr. Scott obtained, 
however, a very high premium for the ;^50,ooo which he had 
originally invested in the company ; as did also Gardiner McCand- 
less, who was induced to sell out the same year. Mr. McCand- 
less received ^183,000 for his original investment of something 
like ;^42,ooo in the convertible bonds. 

Thus did events justify the amazing foresight displayed by 
Andrew Carnegie when, only eight months after the opening of 
the Edgar Thomson works, he outlined, in his letter of April 
.13th, 1876, the principal changes in the personnel of the organi- 
zation which have just been described. It is an astonishing, 
almost an uncanny, exhibition of that clairvoyant faculty for 
which he has always been noted. In one aspect, too, it illus- 
trates the practical working of the Carnegie motto : " Concen- 
tration ! First honesty, then industry, then concentration." 

A further change was hinted at in Carnegie's letters for 
which the way was thus being gradually prepared. This was 
the combination of the Union Iron Mills, the Lucy Furnaces, 
and the Edgar Thomson Steel Works. 

The causes which brought about this consolidation are not 
very complex. On the one hand was the elder Carnegie's am- 
bition to make the works, which were now to bear his name, as 
impressive as possible. On the other hand, was the wish of his 
brother and Mr. Phipps to have a larger share in such a good 
thing as the Edgar Thomson Company. Forty odd per cent, in 
dividends is very attractive ; and no doubt both Mr. Phipps and 
young Carnegie were by this time thoroughly sorry that they had 
sacrificed any part of their shares in the Edgar Thomson Com- 



THE PIG-IRON DISPUTE 131 

pany. Accordingly a scheme of consolidation was made, and the 
manner in which it was carried out is told, with much interest- 
ing detail, in the following letters : 

Pittsburgh, Pa., Mch. 31st. 1881. 
Wm. P. Shinn, Esq., Pittsburgh, Pa. 

Dear Sir: In 1879, the subject was broached, I do not re- 
member by whom, to consolidate the Lucy Furnace Co. and the 
Union Iron Mills with The Edgar Thomson Steel Co. Limited. 

We had so many disagreements and much trouble in fixing 
the price of pig-iron furnished by the Lucy Furnace Co. that I 
at once concluded that it was a good thing to do, and expressed 
myself in favor of the scheme provided it could be carried out 
on a fair basis. I was governed entirely to vote on your recom- 
mendation that the proposition of 55 for the E. T. S. Co. Limd. 
and 45 for the other property. 

Now that I have become familiar with the subject, and our 
experience of working the past year under the consolidation, I 
do not think the property put in should have [been] taken at 
over 30^. 

Having had the utmost confidence in your judgment, in such 
matters, I have a curiosity in learning what governed you in 
giving the advice you did, and thought it due you to give you 
an opportunity to explain how you made such a mistake. 

Yours truly 

John Scott. 

Pittsburgh, April 4th. 1881 
Jo/m Scott Esq. Pittsburgh, Pa. 

Dr. Sir: I have your letter of March 31st, in which you 
refer to the basis of consolidation of interests of the Edgar 
Thomson Steel Co. Limited with the Lucy Furnace Co., Car- 
negie Brothers & Co and Carnegie & Co. on the basis of 55 
per cent to the forrner and 45 per cent to the latter, and ask 
how I came to recommend what you characterize as " such a 
mistake." 

In reply, I will state the circumstances under which the pro- 
posed consolidation was first discussed, and what led me to as- 
sent to the basis named. 

In August 1879 I was invited to Mr. T. M. Carnegie's one 
evening, where I found Messrs. A. Carnegie, T. M. Carnegie 
and H. Phipps. 

The subject of the consolidation was broached, and they 



132 QUARRELS AND EJECTURES 

produced statements of cost and earnings of their properties as 
follows : 

Cost to July ist. Earnings, 1878. Six mos. 1879. 

Union Iron Mills $813,000.00 153,000.00 98,000.00 

Lucy Furnaces 662,000.00 120,000.00 70,000.00 

Coke Works, 4/5 ths 100,000.00 20,000.00 16,000.00 

Total 1,575,000.00 293,000.00 184,000.00 

The cost of E. T. works, exclusive of the amount expended 
on furnaces and the earnings for the same period had been as 
follows : 

Cost of E. T. works July i, '79 $1,522,159.16 

Profits, 1878 $401,800 

" 6 mo. 1879 252,845 

654,645.00 

The costs and earnings of the two properties compared then 
as follows : 

Cost. Earnings 18 mo. 

E. T. S. Works $1,522,000 654,645 

Carnegies' Works 1,575,000 477,000 

But the E. T. S. Co. had furnaces A and B well under way, and 
expected to complete them by Jan. ist, 1880; and I claimed 
there should be added to the cost and earnings of E. T. S. Co. 
an amount equal to four-fifths the cost and earnings of Lucy 
Furnaces, or to cost say ^528,000 
and to earnings 200,000 

This made them compare as follows : 

Cost. Earnings i8 mo. 

E. T. S. Works $2,050,000 $854,645 

Carnegies' Works 1,575,000 477,000 

the proportions of which were relatively 

Cost. Earnings 18 mos. 

E. T. S. Works of cost 56/^ of earnings 64 per cent. 

Carnegies' Works " " 43y^^ " " 36 " 

the average of which gave 

E. T. S. Works 60 

Carnegies' 40 

and I therefore proposed to accept 60 per cent for E. T. S, 
works. 

T. M. Carnegie demurred to this, alleging that the E. T. S. 
Works had been unusually profitable in past 18 months, while 



ANDREW CARNEGIE 



Plate VII. 




SHINN'S SERIOUS CHARGE 133 

the furnace property had been very unusually depressed, pig-iron 
having sold at very low prices; and he insisted on 50 per cent 
for the Carnegie Works. 

A. Carnegie then pointed out that the E. T. S. Works had a 
debt of ^186,000 on its land, which would have to be assumed 
by the joint interest, which if deducted would allow only $1,864,- 
000 as cost of E. T. S. Works, or 54 per cent of the whole. 

Upon these considerations, and for the reason named by you, 
viz. to destroy the unceasing strife and bad feeling in the fixing 
of prices for metal bought of Lucy Furnace Co. in which I had 
been annoyed almost beyond endurance, I suggested 55 percent 
as a compromise which was agreed to. 

It was not mentioned, nor was I aware, that the land on 
which the Lucy Furnaces and Union Iron Mills were built was 
not owned by them; and when Mr. Carnegie urged the mort- 
gage on the E. T. S. property in reduction of its value, he knew 
that a similar and much more important incumbrance was on the 
Union Iron Mills property, which I now understand was only 
leased, at a rental of $4,855 annually and liable to be greatly 
increased when present leases expire. 

This is equal to a mortgage of $ 80,900 

Mortgage on Lucy Furnace property 160,000 

Making a total incumbrance of $240,900 

of which no mention was made at the time, of which I had not 
the slightest knowledge or suspicion, and which good faith re- 
quired should have been set forth. 

Had I known of these incumbrances I never would have 
agreed to consolidating on the basis of 55 and 45 per cent, nor 
would I have agreed to it at all, except to harmonize our inter- 
ests on the point which had caused so much difficulty and hard 
feeling. 

I see that in the new firm of C. B. & Co. Limd. they put in 
the respective properties 

E. T. vS. property $2,500,000 62^ per ct. 

Carnegies' " 1,500,000 37^ " " 

4,000,000 

which is much nearer what the real proportionate value was a 
year ago. Yours truly 

Wm. p. Shinn 



134 QUARRELS AND EJECTURES 

The following interesting data appeared in a foot-note to 
Mr. Shinn's letter: 

1880 

Profits— E. T. S. Works $1,625,000.00 

Lucy $294,524.97 

Coke 96,295.97 

Union Mills. 55.836.71 

446,657.65 

2,071,657.65 

Chgd. Impts. 

Lucy Fur. Co 131.259.57 

Union Mills 55,200.62 

186,460.19 

Leaves actual profits. . 260, 197.46 

The new firm referred to by Mr. Shinn was Carnegie Broth- 
ers & Co., Limited, which was organized on April ist, 1881, 
with a capital of $5,000,000. Of this, $4,000,000 was repre- 
sented by the Union Iron Mills, the Lucy Furnaces, certain 
unimportant coke interests of Andrew Carnegie, and the Edgar 
Thomson works. The rest was to be paid in cash. In this 
consolidation the interests were apportioned as follows : 

Andrew Carnegie . .$2,737,977.95 

Thos. M. Carnegie 878,096.58 

Henry Phipps 878,096, 58 

David A. Stewart 175,318.78 

John Scott 175,318.78 

Gardiner McCandless 105,191.00 

John W. Vandervort 50,000.00 

The last named was Carnegie's companion on his trip around 
the world. He soon fell sick and withdrew from active business 
to California, where he died in 1897. 

The earning powers of the several properties are given in the 
foot-note to Mr. Shinn's letter quoted above. Their estimated 
values are given in the articles of incorporation as follows : 

Mortgage. 

Edgar Thomson works $2,385,000 594,000 

Coal mines and Coke ovens at Unity 80,000 

Ore lands at Patton 35, 000 

Lucy Furnaces 750,000 160,000 

Union Iron Mills 630,000 

Four-fifths interest in Larimer Coke works 120,000 

$4,000,000 



INCOHERENT PLANS 135 

The advantages of industrial consolidation had not, at this 
date, received any general recognition; and, as we have seen, it 
was other considerations than increased efficiency and economy 
that prompted the first imperfect combination of the Carnegie 
properties. 

As illustrating how vague and incoherent were the plans of 
the group of men controlling the property at this time, it may 
be mentioned that two months after the consolidation described, 
the Lucy Furnaces were taken out of it and turned over to Wil- 
son, Walker & Co. During these eight weeks, however, their 
value was supposed to have increased from ^750,000 to ;^i,ooo,- 
000 ; and Messrs. John T. Wilson, James R. Wilson, and John 
Walker each subscribed for $142,857 of stock in the Lucy 
Furnace Company, Limited, with its million-dollar capital. An- 
drew Carnegie's share in it amounted to $420,627; the rest of 
the group holding interests from $58,539 in the cases of Thomas 
M. Carnegie and Henry Phipps, to $3,333 in the case of John 
Vandevort. 




Blowing engines for blast-furnace 



CHAPTER IX 

A GLANCE AT PROCESSES 

AT this point a brief description 
of the processes of iron and steel 
making is necessary in order that 
readers unfamiliar with 
these arts may intel- 
ligently follow the 
course of this narra- 
tive. While it is not 
possible that such a 
rough outline can con- 
vey more than a hint of the wonderful transformations in- 
volved in modern methods of iron and steel manufacture, it may 
nevertheless help the reader to appreciate the nature of the 
great industrial evolution we are tracing. 

There is not a State in the American Union in which iron- 
stone is not found. Indeed-, one may say there is no consider- 
able area of the earth's surface where it does not exist. The 
ancients undoubtedly knew how to mine and smelt it ; but, un- 
like other metals found in the tombs and habitations of vanished 
races, iron, unless protected from air and moisture, rapidly 
perishes through oxidation. In other words it rusts away. 
The oldest known piece of wrought-iron of any great size is 
found in the pillar of a temple at Delhi, India. It is sixteen 
inches in diameter and weighs about seventeen tons. No one 
knows when or how it was made. 

Many tribes of savages existing in our own time have been 
found in possession of primitive means of smelting. Speke and 

Livingstone describe the miniature blast-furnaces of the natives 

136 



EARLY FURNACE PRACTICE 137 

of Central Africa; and it is not improbable that these simple 
operations were learned from the Egyptians, whose routes of 
trade are now known to have penetrated into what had become 
in our own time "Darkest Africa." 

It is not, however, with ancient practices that we are now 
concerned. It is rather with those mammoth operations which 
have given a special character to modern civilization and made 
it different from anything that has preceded it. 

The first operation is to mine the ore. This needs no de- 
scription for the present. The separation of the metal from the 
earthy substances usually associated with it is effected in the 
blast-furnace, w^here it is converted into pig-iron, the crudest 
form of manufactured iron. 

A modern blast-furnace is a giant structure shaped some- 
what like the chimney of a kerosene-oil lamp. The point of 
greatest diameter — where the lamp chimney swells out to make 
room for the flame — is called the bosh, frequently mentioned in 
this work. This furnace is filled with a mixture of iron ore, 
fuel, and lime; and a blast of air is forced through it from be- 
low. This draft at first was cold air ; but an ingenious English- 
man discovered, sixty or seventy years ago, that the ore was re- 
duced more quickly, and with a smaller consumption of fuel, if 
the blast was heated before being forced into the furnace. To 
the bewilderment of the scientists of that day this simple change 
resulted in doubling the iron product of a given quantity of fuel. 
Before that happy discovery the output of a blast-furnace had 
ranged from fifteen and a half tons a week, in 1788, to thirty- 
five tons in 1827; and at the former date the yearly product of 
the whole of England did not amount to as much as was recently 
produced in four months by a single American furnace. In 
these forty years the total annual iron production of England 
rose from 70,000 to 700,000 tons. In the forty years following 
the introduction of the hot blast the furnace product rose from 
thirty- five tons weekly to four hundred tons. This shows a 
wonderful development of the art of iron production ; but the lat- 



138 



A GLANCE AT PROCESSES 



ter figure was multiplied seven times by the Lucy furnace in the 
succeeding twelve years, and almost fifteen times by one of the 
furnaces built since at Duquesne. 

In the early blast-furnaces the gases freed in the process of 
reduction were allowed to escape in flames at the top of the 
stack, illuminating the country for miles around ; but towards the 
middle of the nineteenth century means were devised for utiliz- 
ing this vast volume of flame for the purpose of raising steam 
and heating the blast. For the latter purpose it was led from 
the throat of the furnace into ovens containing iron pipes through 
which the blast was blown. These iron pipes limited the tem- 
perature of the blast 
to that of their own 
melting-point. Pres- 
ently the pipes were 
displaced by enor- 
mous stoves contain- 
ing fire-brick, against 
which the flames are 
now directed. After 
the fire - brick has 
been brought to a 
great heat, the gas is 
turned into a second 
stove, to perform the same service there; while the air-blast 
is admitted to the first stove, where it is raised to a very 
high temperature — 1200° to 1600° Fahrenheit. So in alterna- 
tion the stoves are thus heated, and the blast passed through 
them one after the other, on the regenerative principle invented 
by Dr. Siemens. To the higher degree of temperature thus 
secured is due a large part of the increased output of the Lucy 
and Isabella furnaces during their long contest. In the first 
photograph of the former made in 1873 the stack seems to stand 
alone, because the hot-blast stoves were small at this date. In 
the second illustration the stack can hardly be seen for the stoves, 




Lucy furnaces, showing hot-blast stoves. 



A CHILLED STACK 



139 



which, indeed, to the untrained onlooker, seem the most impor- 
tant part of the plant. 

At the time the Lucy furnace was built the lines of blast- 
furnaces were not the graceful curves of the lamp chimney that 




Drawing the finished coke. The method of charging the raw coal is also seen. It 
dropped from the donkey-car through an opening in the top of the oven. 



has been used to illustrate them. They were almost straight 
lines; and the bosh formed an angle. A few months after the 
Lucy had been started, the mass inside got chilled, so that the 
metal stopped running down. The furnace was therefore cmp- 



140 



A GLANCE AT PROCESSES 




Casting-pit of blast-furnace, where the metal is made 
into "pigs." 



tied ; and to the surprise of everybody connected with it, the 
wooden Hning that had been built to protect the inside from 
the first loads of ore, etc., which were poured into it, was found 
in some places almost intact. Of course it ought to have been 

burnt up; but in- 
stead of that large 
parts remained and 
were hardly charred. 
This set some men 
thinking; and the 
outcome of their 
cogitations was the 
idea that the shape 
of the furnace was 
all wrong. It was 
evident that in this 
furnace the zone of 
fusion did not ex- 
tend beyond the narrow range of the central funnel, and that, 
consequently, the benefit of its large interior capacity was 
mainly lost. Builders therefore gradually changed the shape 
of furnaces, cutting out all angles, lengthening the curves, 
and increasing the size of the hearth. In 1872 the Lucy 
furnace was 75 feet high, 20 feet in diameter at the bosh, 
and 9 feet wide at the hearth. The product was fifty to sixty 
tons a day. In 1902 the same furnace was 90 feet high with 
the same diameter of bosh as formerly, and 12^ feet wide at 
the hearth. The product has been as high as 500 tons a day 
and 12,000 tons a month; and for every man employed the 
average product of pig-iron is now two tons a day, as against 
one ton thirty years ago. 

The fuel first used in blast-furnaces was charcoal ; but the 
threatened depletion of the forests of Britain caused the substi- 
tution of pit-coal. As early as 1773 charred coal or coke was 
tried in England ; but its use did not become general until well 



PROCESS OF COKING 141 

into the last century. In America charcoal was largely used 
long after it was found that antliracite, which is a natural coke, 
was suitable for smelting. As related elsewhere in this work 
the use of coke — or "cake " coal — did not become general until 
the early seventies. It was the proximity of the Connellsville 
beds of bituminous coal — which is singularly free from sulphur 
and other impurities — that gave Pittsburg its leadership in the 
iron industry of America. 

The purpose of changing this coal into coke is to rid it of 
the sulphur and phosphorus which is found in greater or less 
quantities in all soft coals. There is a saying among iron-workers 
that these elements are to iron what the devil is to religion. As 
a matter of fact they are worse ; for there are some good work- 
able religions that could not get along without the devil, but 
there is no good workable iron with sulphur and phosphorus in 
it. The process of coking consists of baking the coal in hot 
ovens, so that, to continue the theological simile, the diabolic 
parts are driven off as flaming gas from the top of the oven. 
These flaming ovens give a wild and picturesque aspect to the 
coking country as one passes through it by night. Presently 
the coal fuses into a cake, which is cooked for forty to sixty 
hours, until hardly anything but carbon remains. This cake 
is then drenched with water, and pulled out of the oven by a 
door which up to this time has been sealed. The sudden cool- 
ing of the mass splinters it into the form so familiar to all who 
travel on the railroads. In the best furnace practice seventeen 
or eighteen hundred pounds of coke are now used to smelt one 
ton of pig-iron. In the Lucy furnace the amount first used 
was about double that amount. 

The lime which accompanies the ore and coke into the blast- 
furnace produces certain chemical changes which are too com- 
plicated for description here. It also serves as a flux to carry 
away the earthy matters with which the iron is associated in its 
mineral form. These residues constitute the slag, or scum of 
the liquid iron. 



142 



A GLANCE AT PROCESSES 



The furnace is tapped about every four hours ; and the 
molten iron runs, a limpid, glowing stream, into channels and 
moulds that have been prepared for it, where it cools and hard- 
ens into shapes which have suggested the name "pig." Hence 
pig-iron. The channel leading to the pigs is called the "sow," 
and as they are seen lying together the simile is obvious. 
In modern practice the iron is usually poured into enormous 

ladles, which are 
drawn by locomo- 
tives to the convert- 
ers, where it is made 
into Bessemer steel. 
Before following 
a train of these la- 
dles to the convert- 
ing house, it is worth 
while to see what be- 
comes of the pigs of 
iron as soon as they 
are cold enough to 
be taken out of their moulds. In former days they were usually 
converted into wrought-iron in such places as the Union mills. 
Placed in a puddling-furnace — an oven with a concave floor — 
with a certain amount of ore for "fettling," they were reduced 
to liquid form and boiled and stirred about until most of the 
impurities were driven off. When the bubbling mass thickened 
and assumed a pasty consistency, the puddler passed a long bar 
through a small opening in the furnace door, and rolled the paste 
into a ball. This ball was then withdrawn and carried, dripping 
with liquid fire, to a queer arrangement of big wheels which 
crushed and rolled the ball over and over, squeezing out all sorts 
of useless stuff and further solidifying the mass. This machine 
has been mentioned in another chapter as the squeezer. The 
ball was then re-heated, and passed under hammers and through 
rollers; and the kneading it thus repeatedly underwent gave it 




Train of ladles. 



THE JONES MIXER 143 

the fibrous quality of wrought-iron. When it had been finished 
into bars it was ready for the market. This was the material of 
which Kloman made his famous axles. 

The Bessemer process of steel-making has displaced the art 
of puddling, except for a few special purposes. Steel rusts more 
readily than iron ; and for this reason chains for cables are still 
made of puddled-iron. 

Cast-iron is pig-iron mixed with ore and scrap, melted in a 
cupola and then cast into moulds of the shapes required. When 
cold it is drilled, planed, and finished into the heavy parts of 
machinery where great resistance is called for. When fractured, 
cast-iron is seen to have a granulated form, like dirty sugar; 
whereas wrought-iron has a fibrous quality that makes it ductile 
and tough. 

And now it is necessary to return to the train of ladles be- 
fore the contents cool. Covered with coke dust to retain the 
heat, the liquid pig metal can be transported a dozen miles to a 
converter; and this is sometimes done. At every curve and 
bump of the locomotive, some of the metal slops over the edge 
of the ladle, and breaks into a galaxy of shooting stars. Pres- 
ently the train arrives alongside the Jones mixer, a huge iron 
chest lined with refractory bricks, and capable of holding fifty 
to two hundred and fifty tons of liquid pig metal. It is hung 
on trunnions, so that it may be swung to and fro like a cradle ; 
for here the contents of many ladles are mixed to equalize the 
variations of both chemical composition and temperature of the 
furnace product. Before the invention of the mixer, the pig- 
iron had to be re-melted in a cupola before it could be converted 
into steel. One by one the ladles are emptied into the mixer, 
the liquid flowing clean and creamy, with fairy lights dancing 
over its surface. Whenever a few drops spill to the ground 
they rebound in thousands of tiny points of fire, exploding with 
the noise of a miniature fusillade. A boy of thirteen or four- 
teen, his imp-like face black with soot, stands near the flaming 
funnel of the mixer, shouting shrill directions to his fellow 



144 A GLANCE AT PROCESSES 

demon, who, somewhere concealed among the dark shadows of 
the wheels and chains aloft, reverses the five-ton ladles with the 
ease of a society woman emptying her cup of tea. At night the 
scene is indescribably wild and beautiful. The flashing fire- 
works, the terrific gusts of heat, the gaping, glowing mouth of 
the giant chest, the quivering light from the liquid iron, the 
roar of a near-by converter, the weird figure of the child and the 
pipings of his shrill voice, the smoke and fumes and confusion, 
combine to produce an effect on the mind that no words can 
translate. Dante in his most hellish conception never ap- 
proached such a reality. The most eloquent preacher that ever 
described the condition of the damned was as a babbling brook 
in a soft summer landscape compared with this. And who shall 
tell of what goes on in the giant chest where two hundred and 
fifty tons of liquid iron have just been poured, to be rocked to 
and fro, a seething, swirling, bubbling mass } 

In one aspect this is the cradle of civilization. Here, in 
the Jones mixer, goes on the first of the processes by which is 
made the steel of locomotives, rails, and ships that link race to 
race throughout the world ; of the engines of mines and facto- 
ries; of the machines of thousands of mills; of the reapers and 
harvesters of farms ; of the beams and angles and bars of which 
modern cities are largely built. Here rocking in this huge box 
are the springs of chronometers that keep pace with the prog- 
ress of the stars; the needles that point the mariner's way; 
the tubes through which the astronomer watches the birth of 
worlds ; the disks that talk through a thousand miles of space ; 
and most of the other miracles that make the sum of modern 
civilization. To the intelligent onlooker there is as much poetry 
in Jones' box as there was in Pandora's ; and even this does not 
contain all the wonders of the beautiful transformations which 
have given Pittsburg a yellow crown of light. 

From the mixer the molten iron, now uniform in composi- 
tion, is transferred to the converter. Samples have been quickly 
cooled and analyzed, so as to afford a guide to future operations. 



BRILLIANT PYROTECHNICS 145 

that the final product may have just the qualities of resistance 
or ductility required of it. With the same spluttering and scin- 
tillations as before, the liquid is poured through the lower open- 
ing of the mixer into fresh ladles, which in turn are emptied 
into an egg-shaped vessel. This is the Bessemer converter, the 
most beautiful and perfect piece of mechanism ever devised by 
the human mind. Itself of enormous proportions and weight, 
it is so delicately poised that when filled with ten or fifteen tons 
of liquid iron, it can be moved at the touch of a finger. The 
metal is poured into the vessel while suspended in a horizontal 
position. A blast of cold air is then forced through a number 
of holes in its lower end, and simultaneously the great oval 
mass becomes erect. Sir Henry Bessemer has himself elo- 
quently depicted the beauty of the transformation which now 
takes place : 

**The powerful jets of air spring upward through the fluid 
mass of metal. The air expanding in volume divides itself into 
globules, or bursts violently upward, carrying with it some hun- 
dredweight of fluid metal which again falls into the boiling mass 
below. Every part of the apparatus trembles under the violent 
agitation thus produced ; a roaring flame rushes from the mouth 
of the vessel, and as the process advances it changes its violet 
color to orange, and finally to a voluminous pure white flame. 
The sparks, which at first were large like those of ordinary 
foundry iron, change into small hissing points, and these gradu- 
ally give way to soft floating specks of bluish light, as the state 
of malleable iron is approached. During the process the heat 
has rapidly risen from the comparatively low temperature of 
melted pig-iron to one vastly greater than the highest known 
welding heats; the iron becomes perfectly fluid, and even rises 
so much above the melting-point as to admit of its being poured 
from the converter into a founder's ladle, and from thence to be 
transferred to several successive moulds." 

The chemical changes accompanying this gorgeous display 
are equally beautiful. The liquid pig metal contains a percent- 
age of manganese, silicon, and carbon. If we could conceive 

of these elements as endowed with human emotion, we might 
10 



146 



A GLANCE AT PROCESSES 




Falling ingot-moulds with molten steel. 



say that every particle is in love with some atom of oxygen. 
The converting-vessel is the meeting place of the lovers and the 
scene of their marriage. With noisy celebration the union of 
the little globules of air and the tiny atoms takes place, and 

emerging from the 
lip of the converter 
in sparkling radi- 
ance the happy pairs 
soar avva}'- to spend 
their short lives to- 
gether. Scientists 
stolidly call this 
marriage " chemical 
affinity. " Goethe 
named the similar 
union of human 
souls " elective affin- 
ity. " The comparison suggested is not so fanciful as it seems. 
Every atom of every element in the twelve-ton charge now roar- 
ing and flaming before us will eventually find and unite with 
the atom of oxygen for which it has an affinity — chemical or 
elective it matters not. It may be this moment or the next, in 
the violent ebullition of the Bessemer converter; it may be 
thousands of years hence in the beam of a sky-scraper; but 
sooner or later, every atom of iron as well as every atom of 
silicon and carbon will find its mate in the oxygen of the air, 
and so separate itself from its fellows. This is a predestination 
of matter not found in theologies. 

When the flame at the lip of the converter becomes white it 
is a sign that the manganese, silicon, and carbon have united 
with the oxygen blown through the mass and escaped into the 
air. Now the iron itself is following the same course, and that 
means waste. So the youth, who has been watching the con- 
flagration through colored goggles from a distant platform, 
touches a lever; and the huge vessel slowly bends forward so 



p 



BESSEMER CONVERTER IN OPERATION 



Plate VIII. 




Courtesy of 8, S. McClure Co. 



Copyright by the S. 8. McClore Co. 



THE BESSEMER PROCESS 



147 



as to let the metal flow into the^body of the converter, and un- 
cover the air-holes beneath. With a mighty rush the blast now 
sweeps along the surface of the metal, detaching a million minor 
particles of glowing matter and sending a shower of sparks 
across the converting-pit. It is the brilliant finale of the gor- 
geous display. To replace a part of the lost carbon, a few 
shovelfuls of spiegeleisen or ferro-manganese are thrown into 
the mass, which is then poured into moulds, to solidify into 
ingots of steel. When taken out of the moulds the steel is 
passed under heavy rollers to give it the shapes needed for its 
intended use as rails, beams, or plates, as well as to knead it into 
that fibrous texture which we saw resulted from similar action 
in the making of wrought-iron. The first rolling thus makes 
blooms; and these cut into lengths make billets, which again 
are shaped into a hundred and one things as needed. Such in 
brief, and in rough outline, is the process of Bessemer steel 
manufacture. 

Henry Bessemer, who was knighted in recognition of his 
beautiful invention, 
took out his first 
patent in 1856. Ten 
years later the 
world's output of 
Bessemer steel 
amounted to about 
100,000 tons. By 
1870 it reached 
300,000 tons. In 
the first year of the 
present century it 
had attained a total 
of 19,000,000 tons, of which nearly 9,000,000 tons were pro- 
duced in the United States. 

Since 1886, however, a newer method of stccl-making has 
grown with even greater rapidity. This is known as the open- 




Steel ing-ot about to enter the rolls. 



148 



A GLANCE AT PROCESSES 



hearth basic process. It is probable that this will soon displace 
the beautiful and simple invention of Sir Henry Bessemer, just 
as the latter displaced puddling. 




Huge ingot being forged for armor-plate under the 12,000-ton hydraulic press at 

Homestead. 

The advantage which the basic open-hearth possesses over 
the Bessemer converter is that it enables the steel-maker to use 
ores high in phosphorus. It also permits the easy working- 
over of scrap, spoiled ends of billets and rails, and old stuff of 



THE BASIC OPEN-HEARTH 149 

all kinds. At Homestead are two large basic furnaces from 
which the entire top can be removed ; and parts of old machines 
weighing many tons are lifted bodily into them for re-conver- 
sion. Moreover, the capacity of the largest Bessemer converter 
is about fifteen tons. In the basic furnace fifty tons are often 
made at once ; and the product of several hearths can be drawn 
at the same moment to make an ingot of a hundred and fifty 
tons if desired. This has been done at Homestead. 

The basic open-hearth is simply a huge and improved pud- 
dling-furnace. A bath of pig metal is used in which to dissolve 
scrap of all kinds with a mixture of ore. The charge and lin- 
ing of the furnace are alkaline, so as to convert the acids of 
phosphorus into a neutral base, which, with other so-called 
impurities, floats on the metal as slag as it is drawn off. The 
process has none of the picturesque aspects of the Bessemer con- 
verter. The most interesting thing about it to a layman is to 
see, through colored glasses, how the steel boils and bubbles 
as if it were so much milk. The bigness of it — its fifty-ton 
ladles swinging in space, its hundred-ton ingots under a twelve- 
thousand-ton press as seen at Homestead — makes it impressive ; 
but the gentle boiling of steel for hours without any fireworks 
or poetry, in a huge shed as empty of workmen as a church on 
week-days, is not a very interesting sight. Indeed, it would 
seem as if all that is spectacular will have been lost in the 
manufacture of steel with the passing of the Jones mixer and 
the Bessemer converter. To the chemist, however, the basic 
process is full of interest; but this short description is not 
designed for him. In 1886 the product of this process was 
218,973 tons in America and in England, 694,1 50 tons. In 
1902 it approximated five and a half million tons in America, 
and in England three and a half million tons. The present 
rate of increase in the United States is over a hundred thou- 
sand tons a month. 



CHAPTER X 
THE RISE AND GROWTH OF HOMESTEAD 




AMITY HOMESTEAD was 
the name given by John Mc- 
Clure four generations ago to 
a quaint country seat which 
he built in the bend of the 
Monongahela a mile or so be- 
low Braddock's crossing, and 
ten miles from Pittsburg. He 
is said to have been a fox-hunting Presbyterian, with all the 
rigorous rectitude, blunt virtues, and frank hospitality which 
this implies. Thus planting the traditions of the old home in 
a new environment, he passed the picturesque place on to his 
son John, and through him to his grandson Aldiel. In 1872 the 
latter sold one hundred and thirteen acres to a banking and in- 
surance company ; and a town was forthwith laid out and called 
Homestead. The first sale of lots was made to all the old-time 
accompaniments of a brass band and free junketing; and the 
Pittsburg, Virginia and Charleston Railroad building across the 
empty lots the following year, the town took a good start and 
bade fair soon to grow as big as the older places in the region. 
But the panic of 1873 came and gave it a set-back from which 
it was long in recovering. In 1879 there were less than six 
hundred inhabitants in the place. 

On October 21st of that year, however, an event occurred of 
first importance in the history of Homestead. This was the in- 
corporation of the Pittsburg Bessemer Steel Company, Limited, 
with a capital of $250,000. The founders of this company were 
all connected with the firms which had been supplied with 

150 



KLOMAN STARTS RIVAL WORKS 151 

merchant steel for a time by the Edgar Thomson Company and, 
as already related, had been swddenly cut off from supplies 
through the refusal of that firm to fill orders for billets. Their 
subscriptions were as follows : 

Wm. G. Park, of Park Bros. lS: Co 5 shares, $50,000 



Curtis G. & C. Curtis Hussey, of llussey, Weils & Co. 5 

Wm. II. Singer, of Singer, Nimick & Co 5 

Reuben Miller, of the Crescent Steel Works 4 

Wm. Clark, of the Solar Iron and Steel Works 4 

Andrew Kloman, of the Superior Mill, Allegheny. ... 2 



50,000 
50,000 
40,000 
40,000 
20,000 



The Singer concern made a specialty of tool cast-steel, pa- 
tent rolled saw-plates, spring and plow steel, axles, tires, etc. 
The Hussey firm made refined cast-steel for edge tools, homo- 
geneous plates for locomotives, boilers, and fire-boxes, and cast- 
steel forgings for crank-pins, car-axles, etc. Park Brothers 
were the owners of the Black Diamond Steel Works, and were 
in a somewhat similar line; while Kloman had leased the Supe- 
rior Mill in Allegheny and had recommenced the manufacture 
of eye-bars and structural material. He was also rolling light 
rails. 

Kloman's lease ran out in 1879; ^^^^ he decided to build a 
mill of his own. He bought a small tract of land adjoining the 
City Farm at Homestead, and commenced the erection of a 
building 684 feet long by 85 wide ; to contain a twenty-one inch 
rail-mill, two Universal mills, a sixteen-inch bar-train, and a 
muck-train. At the same time the Pittsburg Bessemer Steel 
Company bought some forty or fifty acres of land adjoining 
Kloman's, and commenced the erection of a converting works 
and blooming-mill. The two concerns were designed to work 
together, Kloman taking the surplus product of the Bessemer 
Steel Company and working it up into structural shapes. One 
Universal mill and four steam-hammers were to be constantly 
run on the Kloman patent solid eye-bars; and he gauged the 
capacity of his plant at 50,000 tons of steel rails and 30,000 
tons of structural material annually. 

While building his own mill Kloman supervised the erec- 



152 GROWTH OF HOMESTEAD 

tion of the adjoining converting works; and his skill and expe- 
rience, joined to those of Macintosh & Hemphill, who had the 
contract for the engines, and later became stockholders in the 
enterprise, proved of inestimable value to his associates. 

The result was unsurpassed not only in the completeness and 
efficiency of the works, but in the rapidity of their construction. 
While the Edgar Thomson plant was over three years in build- 
ing — a delay not entirely due to the panic — the Homestead 
works were put in operation fifteen months after the land was 
bought. The first steel was made on March 19th, 1881, and 
the first rail on August 9th of the same year. 

Before the mill was quite completed, however, Kloman died. 
After a life of patient and fruitful endeavor, of numberless vic- 
tories in the realm of invention, of successes ever ripening into 
fortune but always falling at the feet of others, the pathos of 
his career reached its culmination when hope was brightest. 
From the very conception of the great industry whose growth 
Ave are tracing, until the moment of his death, Andrew Klo- 
man's influence persisted without a break. He founded the 
business ; built the Twenty-ninth Street mill; rebuilt and made 
successful the Thirty-third Street mill. He was prominent in 
the Lucy Furnace enterprise ; and he worked hard for the Edgar 
Thomson works. Finally the great Homestead plant was of 
his founding; and even to-day some of the machines he built 
there are running in testimony to his thoroughness.* 

The Pittsburg Bessemer Company at once purchased Klo- 
man's unfinished mill, and carried out the contracts for rails 
that he had made. By September, 1881, they were turning out 
200 tons of rails a day and had orders booked for 15,000 tons 
at profitable prices. The Carnegies looked on with surprise 



* " In broad charity, in great patience, in uncomplaining endurance of 
wrongs, in conscientious veracity and uprightness of integrity, in calmness and 
serenity of manner, we recognize the higher type of Christian manhood." — From 
the resolutions of the Board of Directors of the Pittsburg Bessemer Steel Cotn- 
pany, on the death of Andrew Kloman. 



ARBITRARY MANAGEMENT 153 

and alarm. Up to this time they had been the only makers 
of rails in the Pittsburg distri<5t. Here was competition at 
their very door. Councils of war were held once more on Brad- 
dock's Field ; for it looked as if the prosperity which had hung 
so lovingly over the Edgar Thomson works had now crossed the 
river and alighted upon the rival enterprise at Homestead. 

Had the wisdom which governed the designing and construc- 
tion of the works been maintained in their management, it is 
likely that their initial prosperity would have continued until 
they had surpassed their great rivals at Braddock. That the pos- 
sibilities of a phenomenal success were there was brilliantly 



Assessment .Vo vl— _» bcin^Jf ^ n ^ ^per cent on '-^-^»x > | 

Shares Slock of The Pittsburgh Bessemer Steel Co.. Limited j 



An assessment notice. 

demonstrated a few years later under other leaders. But, un- 
fortunately, there was no Captain Jones to weld into unity the 
conflicting racial elements with which the new works were filled. 
The rail-mill was controlled by the Welsh; and if a desirable 
post became vacant, it was not filled by the next man, but by 
some newly imported friend of the Welsh foreman. The Irish 
were supreme in the converting works ; and in the blooming- 
mill yet a third nationality was in power. Over all was an un- 
reasonable and arbitrary management ever tending to open con- 
flict with the workmen. In a few months this conflict came, 
and set up dissensions which ultimately destroyed the corpora- 
tion. 

William Clark, who was put in charge of the works, was a 
bitter opponent of labor-unions ; and before going to Homestead 
he had incurred the dislike of the men for his prowess as a 
"strike-breaker," of which he was rather proud. It was not 
long before the trouble he was ever looking for came. One day 



154 GROWTH OF HOMESTEAD 

after the furnaces had all been charged with ingots, the men 
came to him in a body and made some demand which he had 
previously refused. As a stoppage would have involved the 
firm in a great loss, the workmen's requirements were met, but 
with mental reservations on the part of Clark. At the end of 
the year he issued an order requiring employees to sign an 
agreement renouncing their right to join labor-unions, and re- 
quiring union men to leave their organizations at once. The 
alternative presented was dismissal from the company's service. 
Most of the men were members of the Amalgamated Associa- 
tion of Iron and Steel Workers; and on the ist of January, 
1882, these refused to sign the agreement, and were locked out. 
After the works had been idle a week, the company gave notice 
that the men could not return to work, even if they signed the 
agreement, unless they would accept a reduction of wages. This 
intensified the bitterness of the workmen ; and the Amalgamated 
Association took cognizance of the dispute. 

At this time the Amalgamated Association was the most 
powerful labor organization in existence, having a membership 
of 70,000, and controlling every department of the iron and steel 
industry. Except in a few small works, there was not a wheel 
turning nor a fire burning from Maine to Texas that was not 
cared for by an Association man. From the newly established 
furnaces in Colorado to the oldest rolling-mill in the Keystone 
State the authority of the Amalgamated Association was almost 
supreme; and, generally speaking, its power at this date was 
beneficently and properly exercised. Its origin may be briefly 
outlined. 

In 1858 some men in the Pittsburg iron-mills attempted 
the formation of a society for the protection of working men 
against unreasonable exactions of employers, and for the discus- 
sion and reform of long-standing grievances. Inasmuch as the 
new movement was regarded by employers with suspicion, the 
workmen were obliged to conduct their deliberations with se- 
crecy; and thus disadvantaged the movement failed. A couple 



FIRST HOMESTEAD STRIKE 155 

of years later the effort was renewed, and the United Sons of 
Vulcan was established by the ^puddlers, heaters, rollers, and 
roughers. The new organization won recognition from employ- 
ers; and in February, 1865, it justified itself by securing the 
first sliding scale of wages. Following the example of the 
Sons of Vulcan came other labor organizations, until every de- 
partment of iron and steel working was included in the move- 
ment. After the long strike of 1874 the obvious advantages of 
consolidating these different bodies led to the formation, in 
August, 1876, of the Amalgamated Association of Iron and Steel 
Workers of the United States, with Mr. Joseph Bishop as presi- 
dent. In January, 1880, Mr. John Jarrett took Mr. Bishop's 
place ; and the contest at Homestead now came under his direc- 
tion. 

Mr. Jarrett at once sought an interview with the managers 
of the company; and while his right to meddle in the dispute 
was not questioned, he was put off from day to day with vari- 
ous excuses, and was admitted to a conference only after the 
gravity of the situation had been increased by mutual charges 
and recriminations in the newspapers. Nothing came of the 
conference ; and the labor leaders, seeing in the attitude of the 
owners of the Homestead mill a disposition to attack the Amal- 
gamated Association throughout the Pittsburg district, threat- 
ened to call out the men from every other mill in which these 
owners were interested. " If this condition of affairs continues 
at Homestead," said Mr. Jarrett, "the stockholders in the 
Homestead works who have mills in Pittsburg may have to fight 
the association in their own mills. We shall not much longer 
permit several firms to conveniently fight us in this concentrated 
shape." Response was promptly made to this threat by the 
eviction of the striking workmen from the homes they had rented 
from the company. The labor leaders thereupon embodied their 
threat in a formal resolution, and a date was fixed for the sym- 
pathetic strike. 

Thoroughly alarmed the company now offered to withdraw 



156 GROWTH OF HOMESTEAD 

the objectionable agreement; substituting one requiring the 
men to give three days' notice of an intention to stop work, and 
not more than three men to give such notice at one time. This 
might have been satisfactory to the men ; but they refused to 
accept the reduced scale of wages. In vain the company urged 
that the improved machinery at their command made the work 
easier and the output greater than at similar works. The men 
had won one concession and were determined not to yield a 
point so important as that which remained. So both sides 
made ready — in the newspapers — for a general strike in all the 
works belonging to the owners of Homestead, to begin on the 
nth of March; and the labor leaders took the opportunity 
of including in their resolution three other Pittsburg mills in 
which disputes of various kinds had long been pending. This 
meant the calling out of about 6,000 men, with dangerous pos- 
sibilities of extensions ; and the manufacturers of Pittsburg 
were not unnaturally alarmed at the prospect. 

It is interesting in the light afforded by a hundred sympa- 
thetic strikes since, to read the nai've expressions of opinion 
published at that time by the Homestead managers. Mr. Singer 
" could not see how the Amalgamated Association could order 
a strike in mills where there was no trouble existing between 
employers and employees;" and similar views were voiced by 
others who took the employers' side of the dispute. So the 
thing went on, each side daily publishing columns of protests, 
accusations, and threatenings, until it seemed as though all the 
iron works in Pittsburg would be involved in the struggle. 

The days of grace accorded to the Homestead people thus 
passed by, the dispute ever waxing fiercer — in the newspapers 
— until the very eve of the threatened sympathetic strike, when 
the company capitulated. On the nth of March the first 
Homestead strike was reported settled; and men of all classes 
throughout the Pittsburg district read their papers that morning 
with relief and thanksgiving. It had lasted ten weeks. 

The joy was short-lived, however. The next day misunder- 



THE TROUBLE SPREADS 157 

standings arose between Mr. Clark and the Amalgamated Asso- 
ciation concerning the force and scope of a verbal agreement 
made at the time of the supposed settlement ; and the strike 
was resumed with greater bitterness than ever. At Homestead 
there was great excitement, resulting in a pitched battle be- 
tween deputy sheriffs and strikers, in outrages on '' scabs," and 
even in murder. Demands were made for the state militia by 
the company, and requests for fresh conferences by the labor 
leaders. The newspaper war was renewed ; and Clark threat- 
ened to close the works indefinitely. Appeal was made by out- 
side interests to the other owners, who, publicly vowing they 
were powerless, nevertheless stepped between Clark and the 
strikers and insisted upon a settlement. For a time the con- 
test was transferred to the council-chambers of the owners and 
there waged with hardly less bitterness than before. Indeed, 
the differences which now arose were mainly responsible for the 
final disruption of the company. 

Some degree of harmony was at length reached ; and on 
March 20th the newspapers announced that the strike was " set- 
tled once more. " The terms of the peace were so worded as to 
give it the aspect of a compromise. Practically it was a vic- 
tory for the men. Clark promptly sent in his resignation, and 
it was as promptly accepted. 

Encouraged by its success, the Amalgamated Association a 
few weeks later demanded a general advance of five to fifteen 
per cent, in the wages of all iron and steel workers throughout 
the country. A thunderbolt out of a clear sky, to which this 
demand was compared, could not have excited greater surprise 
and consternation.- Anathematizing the Homestead works and 
all its managers, the iron manufacturers of the country prepared 
for the greatest contest with labor that had ever been seen. 
June 1st, 1882, was the day fixed by the association for the be- 
ginning of this struggle; and on that day the Carnegies and 
two of the firms connected with the Homestead works, who by 
this time had come to hold the Amalgamated Association in 



158 



GROWTH OF HOMESTEAD 



awe, agreed to the latter's demands. In all other mills where 
union labor was employed, work was suspended — in Pittsburg, 
Wheeling, Cleveland, Cincinnati, St. Louis, Springfield, Chi- 
cago, and other places. The iron industry of the country was 
paralyzed in a day; and for nearly four months the struggle 
thus inaugurated continued, marked with wonderful endurance 

on the part of the men and great 
determination on the part of the 
manufacturers. 

For a while the works 
at Homestead managed to 
struggle along, under the 
terms of the settlement, with 
a force composed partly of 
union and partly of non- 
union men ; but the disor- 
ganization of the iron and 
steel trade was more than 
it could cope with, and, on 
August 2 1 St, the works were shut 
down for lack of orders, as the manage- 
ment frankly stated. 

On September 2 1 st the general strike ended 
in the complete discomfiture of the men, who 
for over a month had been dropping from the Amalgamated 
Association, starved into submission. The struggle had cost 
millions and benefited nobody. 

On the very next day a fresh strike occurred at Homestead, 
where an effort had been made, a couple of weeks before, to 
start up again. The cause was a trifling incident growing out 
of the previous dispute. The men objected to the presence of 
a '' scab " who, during the troubles, had shot one of them in 
self-defence ; and to even things up the management also ex- 
pelled the workman who had been thus wounded. 

The new trouble did not last long; but it served to increase 




S^ 



■Shot one of them 
in self-defence." 



^ PURCHASE OF THE STEEL WORKS 159 

the discontent of the stockholders of the concern, whose greater 
interests in their respective mills were thus repeatedly jeopar- 
dized ; and their dissensions became acute. About this time, 
too, the price of steel was rapidly falling; and, alarmed by the 
imminent call for more capital, some of the Homestead stock- 
holders hastened to get out of the company. One of them hav- 
ing secured an option on the shares of some of his associates, 
went to the Carnegies and offered them the control thus 
acquired. 

The offer was promptly accepted. Although trade was now 
very bad and daily growing worse, the Edgar Thomson works 
in the past had been inconveniently drawn upon for supplies of 
steel by the Hartman Steel Company at Beaver Falls, and for 
billets by the Union Iron Mills. The Keystone Bridge Works 
were also using increasingly large quantities of steel ; and the 
Carnegie people were prompt to embrace the opportunity offered 
them of acquiring possession on easy terms of a plant which 
would at once reliev^e the pressure from the Edgar Thomson 
works and remove from their immediate neighborhood a danger- 
ous rival. 

Accordingly in October, 1883, the Homestead mills became 
the property of the Carnegie group. The price paid was the 
cost of the plant, with a reasonable allowance for increased land 
values. Little cash was paid ; and the notes given in pay- 
ment were subsequently liquidated out of the profits of the 
mills. 

The Carnegies, with a view of holding for themselves the 
markets created by the old stockholders, offered the latter the 
privilege of remaining in the enterprise; but with one unimpor- 
tant exception they declined the offer, and, taking their little 
checks and notes, went out of the enterprise with grateful 
hearts. The interest of the one who remained was eventually 
sold for about eight millions. 

It is illustrative of the unfailing luck of the Carnegies that 
the Homestead works, thus acquired when the steel trade was 



i6o 



GROWTH OF HOMESTEAD 



suffering an unparalleled depression, should pay their cost 
within two years. Few of the steel works of the country were 
working up to their full capacity at the end of 1883, and many 
of them were closed. At $35 a ton, none but the best-equipped 
mills could make rails without loss. Even at this price there 
were few orders to be had ; and six of the nine Western mills 
were shut down. At the beginning of December the Edgar 

Thomson had only 
enough work in 
sight to last a few 
days and one con- 
I tingent order of 

8,000 tons of rails, 
! not to be rolled until 

• the order had been 

confirmed. The 
Homestead works 
had been put on bil- 
\ lets for the Union 

Iron Mills, and had 
only enough work in 
sight to keep running 
till the middle of Janu- 
ary. Wilson, Walker & 
Co. stopped work on Decem- 
ber 5th for lack of orders. 
The Joliet mill had just shut 
down ; and the old Chicago mill 
had long before stopped running 
for like reasons. 
But the Carnegie partners had faith in the future, and still 
greater confidence in the genius of the men who had made their 
other enterprises successful; and so, utilizing these dull times 
for repairs and changes, and profiting by low prices of labor and 
material for extensions, they struggled through the period of 





'Went out of the enterprise with 
grateful hearts." 



GROWTH OF THE PLANT i6i 

depression and were ready for the harvest of prosperity when it 
came. 

The conversion of the Homestead works to the production 
of steel specialties is a very striking indication of the new uses 
to which steel was then being put. As we have seen, the works 
— apart from Kloman's — were projected for the manufacture of 
steel ingots and billets to be used by the crucible steel-makers 
of Pittsburg. They were not now used for their original pur- 
pose, but for the manufacture of steel specialties which were 
fast taking the place of iron. Steel bridges were now used to 
replace those of wood ; and the low price of Bessemer beams 
and other structural shapes gave an impulse to their use in 
architecture which, in a few years, wrought the revolution cul- 
minating in the sky-scraper. There were thus developed new 
markets which soon brought back prosperity to the trade ; and 
the temporary depression had but served to benefit the far- 
sighted manufacturer who knew enough to utilize the period of 
low prices to add to the capacity of his works. 

At the time of its purchase the Homestead mill was already 
one of the best-equipped plants of its size in the country; but 
during the next few years important additions were made to it 
which put it at the head of the steel works of the world. On 
October, 1885, a new bar and angle mill was constructed, giving 
employment to four hundred men ; and by the middle of July, 
1886, the converting works, under the skilful management of 
Mr. Julian Kennedy, were turning out six hundred tons of 
Bessemer steel a day. In the month of March, 1887, the two 
four-ton converters produced the unexampled total of 19,572 
tons of ingots, arid further broke the record with an output of 
915 tons in one day. 

During their most active period of growth Mr. Julian Ken- 
nedy was superintendent of the works ; and their success was 
in no small degree due to his exceptional engineering skill. 
Just as a new era in blast-furnace construction and product was 

inaugurated under his management at the Edgar Thomson works 
II 



MR. PHIPPS' PROGRESSIVENESS 



163 



in the early '80s, so now was initiated a revolution in rolling- 
mill practice. The slabbing-rnill, already mentioned as the 
giant descendant of the little Zimmer mill at Kloman's, was 
erected by him, as was also the 119-inch plate-mill, the largest 
machine of its kind that up to that time had been built. A 
slight modification in the arrangement of the slabbing-mill — a 
machine that cost nearly a million — fitted it for the rolling of 
armor-plate and doubled its usefulness. Mr. Kennedy invented 




ninety-ton steel ingot at Homestead. 



ingenious labor-saving devices by which massive shapes of red- 
hot steel were tossed lightly about at the will of a single oper- 
ator, and excited -the wonder, not only of chance visitors, but 
of trained engineers who travelled half round the world to see 
them. 

By the insistent progressiveness of Mr. Phipps the first 
basic open-hearth furnace in America was erected by Mr. Ken- 
nedy at Homestead, and was so successful that others followed 
in quick succession. To this early entry into a new field and 



i64 GROWTH OF HOMESTEAD 

to persistent cultivation of it is due the supremacy which the 
Homestead plant has won over the steel works of the world. 
This broad statement is verified by a comparison. In 1886, 
when the first open-hearth plant was built at Homestead, the 
production of steel by this process was only a little over 200,000 
tons in the whole of the United States. Last year (1902) the 
Homestead works alone produced over 1,500,000 tons of open- 
hearth steel. This is about twenty-five per cent, of the total 
output of the country, although there are seventy- seven other 
works in America making open-hearth steel. Added to the 
product of the Bessemer process this gives a total of 1,889,000 
tons of steel made at Homestead last year. 

These results are in a large measure due to the use of natu- 
ral gas in the open-hearth furnaces. The chance which placed 
the Carnegie enterprises in the natural-gas region is to be 
credited with much of their exceptional success; and in the 
manufacture of open-hearth steel this fortuitous factor has been 
of first importance. The heating power of natural gas is far 
greater than that of the ordinary " converter gas " used else- 
where, thus making the operation of fifty-ton furnaces an easy 
matter; while its cost to the Carnegies does not exceed five 
cents a thousand feet, thanks to the enlightened policy of Mr. 
Frick, who, in spite of much opposition, secured large areas of 
gas territory for his firm. It is to this single fact that much of 
the astonishing growth of the business, described later, is due. 

It is at Homestead that wonders are performed as amazing 
as those of the Arabian Nights. Here machines endowed with 
the strength of a hundred giants move obedient to a touch, 
opening furnace doors and lifting out of the glowing flames 
enormous slabs of white-hot steel, much as a child would pick 
up a match-box from the table. Two of these monsters, appro- 
priately named by the men " Leviathan and Behemoth," seem 
gifted with intelligence. Each is attended by a little trolley- 
car that runs busily to and fro, its movements controlled by the 
more sluggish monster. This little attendant may be at one 



WONDER WORKING MACHINES 



65 



end of the long shed and the Leviathan at the other; but no 
sooner does it seem to see its giant master open a furnace door 
and put in his great hand for a fresh lump of hot steel, than it 
runs back like a terrier to its owner and arrives just as the huge 
fist is withdrawn with a glowing slab. This the Leviathan gen- 
tly places on its attendant's back; and, to the admiration of all 
beholders, the little thing trots gayly off with it to the end of 
the building. Even then the wonder is not ended; for the 
little fellow gives a shake to his back, and the glittering mass, 




The Leviathan and 1:- uitendant. 



twice as big as a Saratoga trunk, slides onto a platform of rollers 
which carry it to the mill. And no human hand is seen in the 
operation. 

In another place lady-like machines seem to dance lightly 
m front of the furnaces, occasionally stretching out a hand, seiz- 
ing a red-hot billet, and waltzing with it to the rolling-mill. 
These marvels of mechanical skill have swelling skirts that make 
the idea of the ball-room irresistible. Being suspended from 
above so that their mechanism is not visible by night, they move 
backwards and forwards, from one side to the other, tripping 



i66 GROWTH OF HOME STEAD 

along a row of furnaces and pirouetting diagonally back with a 
swift, graceful, and noiseless sweep in a fashion that suggests 
nothing but play and Virginia reels. And the beautiful lumps 
of steel, white-hot and dripping with fire, are carried as lightly 
as a girl's bouquet, and deposited just as lightly in the lap of 
a chaperone, when their owner glides with easy turnings out 
into another dance. 

In yet another place is a comical being that runs busily about 
carrying hot things round corners. When this grotesque ma- 
chine gets to the end of his track he makes a quick half-turn to 
the right and runs on again. And all the while he holds in 
one hand a long rubber tube, like a boy at a May-pole. This 
contains the electric wires that give him life and intelligence. 

The wizard who has endowed these machines with their 
amazing power is a quiet, modest young fellow, Alva C. Dinkey, 
the present superintendent of the great works. If any of the 
junior partners merit the title of ''young geniuses," Mr. Dinkey 
is certainly one of the first. 

Mr. Dinkey has also charge of the four Carrie blast-furnaces 
just across the river at Rankin, which supply a part of the pig- 
iron used at Homestead. One of these was removed from Ohio 
by the Carrie Furnace Company, rebuilt here in 1883 and blown 
in on February 29th, 1884. Another was built by the same 
company in 1888-90. The Carnegie Steel Company built the 
others. They are each 100 feet high, with 2 3 -foot bosh and 
15-foot hearth. Their total annual capacity is 672,000 tons of 
metal, which is hauled, in a molten state, by locomotives across 
the river bridge to Homestead. The last built of these furnaces 
produced 206,650 tons of pig-iron in 1902. This is believed to 
be the world's record. 



CHAPTER XI 
THE INCOMING OF HENRY CLAY FRICK 





Coke-ovens, 



IN 1882, the iron and steel 
business whose growth 
we are tracing may be 
said to have attained its 
majority. Just twenty- 
one years had elapsed 
since the building of the 
Kloman mill at Twenty- 
ninth Street, when the 
infant industry emerged from the embryonic state of Girty's 
Run. Thanks to skilful nursing, it had passed easily through 
the dangers and diseases of childhood; and under the stimulat- 
ing pabulum of a high tariff it had waxed big and lusty beyond 
all precedent. Like most overgrown things, however, it was 
ill-proportioned and awkward. There was an uncertainty 
about its movements which showed that its physical growth 
had outstripped its mental development. There was none of 
that harmonious working of parts and effective unity of in- 
terests which bespeak the well-balanced organism. 

This was now to be changed — not suddenly and by a con- 
scious effort, but, as is the nature of all growth, quietly, gradu- 
ally, and by unnoticed movements. 

The most conspicuous step in the mental evolution of this 
industrial organism was the simple and prosaic incident which 
brought Henry Clay Frick into contact with it. At the time 
this seemed a very commonplace occurrence. Similar things 
had happened in the history of the enterprise a dozen times 
without attracting more than a passing attention. The present 

167 



1 68 HENRY CLAY FRICK 

one produced a revolution. A simile from the science of biol- 
ogy suggests itself. One of the lowest forms of life exists as a 
little floating globe of jelly, which surrounds and absorbs into 
itself every smaller thing that bumps against it. Sometimes, 
however, a more highly developed creature comes along and 
reverses the process. Something akin to this happened now. 

Up to the time of the incoming of Mr. Frick the group of 
men with whom he now allied himself had had no definite pol- 
icy. The several industrial establishments had all been started 
by some outer accident, and each had developed along its own 
line as the needs of the day required, and as the fostering hand 
of the Government was laid more or less kindly upon it. The 
Kloman germ grew under the stimulus of the war; and the 
Twenty-ninth Street mill was built to meet the increased de- 
mand for Kloman axles. The Cyclops or Thirty-third Street 
mill was but an accidental offshoot of the Kloman stem; and 
the business of both grew with the country's growth and the 
general development of the iron trade. The Keystone Bridge 
Company was simply the incorporation of an existing business. 
The suggestion of the Lucy furnaces came from outside ; as 
did also that which resulted in the steel business at Braddock. 
The Homestead works were built by outsiders ; and their absorp- 
tion by the Carnegie group was a mere accident. And yet, in 
conformity with those laws underlying all growth, the line of 
progress was one which ever tended to round out and complete 
the series of operations in the conversion of crude iron ore into 
finished materials. But this was a natural and uncon.scious 
development growing out of trade conditions. There was at no 
time a well-defined plan or policy of expansion. 

With the incoming of Mr. Frick, however, this vague pro- 
gression at once assumed a definite character. It was the 
marshalling of hosts into a coherent unit, with one mind ruling 
all for the good of each. 

To give a just idea of the revolutionary character of the 
changes inspired by Mr. Frick, it is necessary to anticipate 



Plate IX. 



•#^ 


r^^ 




^c.^H 


:^M 


"^JL^^l 




^^^1 




IR^^^^^^^^^^^^^^HI 


E^j£^^^^^n- 






J 



A MIRACLE OF INDUSTRIALISM 169 

events a little, and give a rough outline of the perfected organi- 
zation which he built up out of^the scattered units which he 
found. These units were the Upper and Lower Union Mills, 
the Lucy Furnaces, the Edgar Thomson Steel Works, the Key- 
stone Bridge Works, the Pittsburg Bessemer plant at Homestead, 
and the little interests in coke and coal at Larimer and Unity, 
and in ore at Scotia. There was also, at Beaver Falls, the 
Hartman Steel Works, an unqualified failure and source of 
uninterrupted vexation to its owners. Apart from the Edgar 
Thomson works and the Upper Union Mill, which had been 
consolidated, each of these plants had its separate organization. 
Such exchange of benefits as was possible among them was off- 
set by the petty factions and jealousies which the Carnegie sys- 
tem of unfriendly rivalry had established. 

While there was a feeble attempt at consolidation made in 
1886, before Mr. Frick assumed supreme power, it did little 
more than modify the disunion described. Once in control, 
Mr. Frick assembled these disorganized units into a solid, com- 
pact, harmonious whole, whose every part worked with the ease 
and silent motion of the perfectly balanced machine. This 
mammoth body owned its own mines, dug its ore with machines 
of amazing power, loaded it into its own steamers, landed it at 
its own ports, transported it on its own railroads, distributed it 
among its many blast-furnaces, and smelted it with coke simi- 
larly brought from its own coal-mines and ovens, and with 
limestone brought from its own quarries. From the moment 
these crude stuffs were dug out of the earth until they flowed 
in a stream of liquid steel into the ladles, there was never a 
price, profit, or royalty paid to an outsider. Without any cessa- 
tion of motion and with hardly any loss of heat, this product 
passed with automatic precision into the multitudinous machines 
which pressed it into billets, rails, armor-plate, bridge structures, 
beams, and the endless variety of shapes required in modern 
architecture. Finally these highly finished materials were often 
conveyed to consumers over the same transportation systems as 



I/O 



HENRY CLAY FRICK 



^''0^-^^^^^%^^^^^. 



before ; and the profit of every movement, as of every process 
and change of form, passed without deduction into the exchequer 
of what was now the Carnegie Steel Company, Limited — a 
single organization with one mind, one purpose, one interest. 
The annual earning power of this great institution increased 
under Mr. Frick's direction from ^1,941,555 to ^40,000,000 
in a dozen years ; while its annual product of steel increased 
during the same period from 332,111 tons to 3,000,000 tons. 
The change thus baldly and inadequately expressed in terms of 
dollars and tons makes the most impressive record, for such a 

short period, of any manufacturing 
organization in this or any other 
country. 

Henry Clay Frick, to whose 
remarkable executive and admin- 
istrative ability this miracle of 
industrialism is due, was only 
thirty-three years of age when he 
joined the Carnegies; and already 
he had achieved the most note- 
worthy success in the coke indus- 
try of Pennsylvania. Born at 
West Overton in 1849, young 
Frick is found at the age of ten 
gathering sheaves in the wheat-fields, carrying wood and water, 
and doing such small farm chores as came within his child's 
strength. This was his way of spending the summer holidays. 
It afforded him the best of exercise, and probably gave him that 
vigor and recuperative power which, later, astonished the sur- 
geons who were probing to find the assassin's bullets in his 
sadly wounded body. In undertaking this farm work the child 
acted on his own impulse. He did it to earn enough money 
to buy his clothes. Then he went back to school, where he 
displayed the same earnestness of purpose. At the age of 
fourteen he not only bought his own clothes but entirely 




'Small farm chores." 



THE ROMANCE OF COKE 171 

maintained himself, working behind the counter of a country 
store. At nineteen he became bookkeeper in his grandfather's 
flouring-mill and distillery at Broad Ford, in the centre of 
what is now the Connellsville coke region. At the threshold 
of manhood he thus found himself fortuitously placed in the 
field of his future activities, where he was destined to find both 
wealth and honor. 

The history of the development of the Connellsville region 
is necessarily a sketch of the personal career of Henry Clay 
Frick. He was one of the first, even at this youthful age, to 
recognize the importance to the expanding iron industries of 
Western Pennsylvania of this wonderfully rich deposit of cok- 
ing coal. He has been the leading spirit in its development; 
so that to-day, in some of the iron-producing centres of the 
United States, Connellsville coke is known only as Frick coke. 
He built railroads for transporting it; and he alone effected the 
consolidation of the industry as it now stands. 

Every great industry has its romance. That of Connells- 
ville coke began in 1842, when a couple of small barges loaded 
with it were floated down the Ohio to Cincinnati. There the 
furnace men looked on it with suspicion and called it " cinders." 
It was sold in small lots at eight cents a bushel ; and a large 
quantity remained after three weeks' effort to dispose of it. 
This remainder was finally traded for a small patent grist-mill, 
which was brought to Connellsville, and turning out to be a 
failure, was there sold for $30. 

But the foundryman who got the coke afterwards thought 
well enough of it to make a trip to Connellsville to get more. 
In this he was disappointed. No one was willing to repeat the 
experiment, for a time at least. In 1850 there were only four 
establishments making coke in the whole of the United States. 
In i860 the census shows that there were twenty-one such 
establishments, all in Pennsylvania; and ten years later, when 
Frick had already appeared on the scene and had become inter- 
ested, there were but twenty-five coking plants in the country. 



172 



HENRY CLAY FRICK 




Coke-ovens under construction. 



In 1 87 1 young Frick organized the firm of Frick & Co. with 
Abraham O. Tintsman, one of his grandfather's partners, and 
Joseph Rist. They had three hundred acres of coal lands and 
a plant of fifty coke-ovens. At this time there were not four 

hundred ovens in the whole 
Connellsville region, which 
included an area of one 
hundred square miles. The 
Mount Pleasant and Broad 
Ford Railroad, of which 
Frick was one of the pro- 
jectors, was opened about 
the same time. The next 
year Frick & Co. erected 
one hundred and fifty more 
ovens. Then the panic of 1873 came, and everybody but Frick 
thought the business had come to an end. But he had gauged 
its possibilities ; and, with a confidence in the country's growth 
rare in one of his years, he realized that the depression was of 
that tidal character which would eventually carry the business 
to higher levels than before. Timid competitors anxious to 
sell out at any price found a ready purchaser in the firm of 
Frick & Co. ; and in the lean years following the panic he 
acquired the interests of his partners, who, burdened with 
unpaid-for purchases, staggered and finally fell in the storm. 
By a singular paradox the panic which ruined his partners 
made Henry C. Frick 's fortune. When the trouble had passed, 
the price of coke rose from ninety cents to ^4 and $5 a ton; 
and the boom put young Frick at the head of the coke industry. 
By 1882, when Frick admitted the Carnegies into his business, 
he had acquired 1,026 ovens and 3,000 acres of coal land. 

The business was now reorganized with a capital of ^2,000,- 
000; and a year later this was increased to $3,000,000 to keep 
pace with the expansion of the trade. By 1889, when its capi- 
tal was increased to $5,000,000, the H. C. Frick Coke Com- 



A GREAT BUSINESS 



173 



pany owned and controlled 35,000 acres of coal land and nearly 
two-thirds of the 15,000 ovens in the Connellsville region, three 
water plants with a pumping capacity of 5,000,000 gallons daily, 
thirty-five miles of railroad track, and 1,200 coke-cars. The 
company employed 11,000 men. The volume of shipments 
amounted to 1,100 car-loads a day, or 330,000 cars a year. 
This is equivalent to 10,000 train-loads, which, strung together, 
would extend from New York to San Francisco, or from London 
across the continent of Europe, through Persia, and well on the 
road to India. 

In 1895 the capital of the H. C. Frick Company was further 
increased to $10,000,000. It now owned 1 1,786 ovens; 40,000 
acres of Connellsville coal 
lands, out of a total of sixty 
to sixty-five thousand acres, 
and its capacity was 25,000 
tons of coke a day, or eighty 
per cent, of the entire pro- 
duction of the Connellsville 
region. A little later its 
monthly output amounted to 
an even million tons ! 

Such, baldly stated, are 
the achievements of the man who from now on becomes the 
most conspicuous and imposing figure in this history. 




Coke-ovens under construction. 



CHAPTER XII 



THE CAPTURE OF THE DUQUESNE STEEL 

WORKS 

MR. FRICK'S first great achievement 
after assuming the leadership of Car- 
negie Brothers & Co. was the capture 
of the rival steel works at 
Duquesne, on the Monon- 
gahela River, a short dis- 
tance above Homestead 
and Braddock. This mas- 
terly move eliminated a 
dangerous competitor from 
the rail market, and gave 
the Carnegies one of the 
most modern and best- 
equipped steel works in 
the country without the 
outlay of a single dollar. 
Even the unparalleled rec- 
ord of Carnegie successes contains no greater industrial victory 
than, this; and business men in Pittsburg still regard it as the 
greatest example of skilful financiering and management in the 
history of the American steel trade. 

The building and early history of the Duquesne steel works 
recall those of Homestead. In a sense, indeed, the former may 
be considered a continuation of the latter ; for they were planned 
for similar reasons, completed by the same men, failed for kin- 
dred causes, and were eventually sold to the same purchasers. 
The Duquesne Steel Company was organized on June 4th, 

174 




Kloman's successor forging an axle at 
Duquesne. 



TO CHECK COMPETiriON 175 

1886, with a capital of ^350,000. Before the plant was com- 
pleted, disagreements arose among the promoters, and these, 
joined to a call for more money, resulted in the suspension of 
construction work. The enterprise was subsequently reorgan- 
ized; and the Allegheny Bessemer Steel Company was formed, 
in March, 1888, with a capital of $700,000, to take over the 
unfinished plant and carry it through to success. Among the 
incorporators were E. L. Clark of the Solar Iron Works and 
William G. and D. E. Park of the Black Diamond Steel Works. 
These gentlemen subscribed for nearly six-sevenths of the total 
capital. The other members of the corporation were also 
practical men. Mr. C. Ansler, consulting engineer of Macin- 
tosh & Hemphill, superintended the building of the works; and 
neither money nor pains were spared to equip them with the 
most improved machinery. The buildings were of an unusually 
substantial and enduring character. They comprised convert- 
ing and blooming house, 75 feet by 200; a rail-mill 6S feet by 
380; a building covering the hotbeds 80 feet by 200; while 
the wings inclosing the finishing machinery were 48 feet by 
64. There were two Bessemer converters, each with a capacity 
of seven tons. 

Operations were commenced in the blooming-mill on Feb- 
ruary 9th, 1889, and a month later in the rail-mill. The long- 
threatened competition with the Carnegie rail monopoly in the 
Pittsburg district had begun. It was met by Andrew Carnegie 
in a distinctly original fashion. 

The Duquesne people, in their search for improved methods, 
had planned to run their ingots from the soaking-pits, without 
further heating, through the various rolls that pressed them 
into billets and rails. This was an unheard-of innovation in 
America, although something of the kind had been done in Eng- 
land; and Sir Henry Bessemer had long ago predicted that the 
practice would become general. The ingots, having passed 
through the 32-inch blooming-mill, went at once through the 
26-inch roughing-train. After shearing, the piece went straight 



1/6 



CAPTURE OF DUQUESNE 



on to the two finishing-trains, which were equipped with espe- 
cially powerful engines. Thus the re-heating of ingots was 
dispensed with ; and from the mould to the finished rail the 
steel passed only once through the furnace, instead of twice 
or thrice, as in other works. 

On learning of the adoption of this economy by a competi- 
tor, Andrew Carnegie drafted a circular to the railroads, warn- 




Ingots going from the Duquesne soaking-pits to the rolls. The mechanical 
perfection is shown by the small number of workmen visible. 



ing them against using the rails thus made, which he repre- 
sented as defective through lack of homogeneity. Although 
this was not believed by the Carnegie officials, the circular, 
having been sent to Pittsburg for that purpose, was printed 
and mailed to the purchasing agents of the railroads throughout 
the country. When asked if he considered this a legitimate 
form of competition, one of the Carnegie partners of that time 
replied that " under ordinary circumstances he would not have 



TROUBLE WITH LABOR i-j-j 

thought it legitimate; but the competition set up by the Du- 
quesne people was also not legitimate, because of their use of 
this direct rolling process." In further self -justification he 
added : " They were a thorn in our flesh and they reduced the 
price of rails. If they had made rails by our method, we 
would have recognized them as legitimate competitors ; but 
when we were attacking their method of rolling we could not 
recognize them by letting them take a contract." 

Pressed to explain the last sentence, Mr. Carnegie's partner 
said : " We could not divide business with them as we other- 
wise would have done." 

It is worthy of remark that this method of direct rolling 
was not abandoned when the Carnegies acquired the Duquesne 
mills. On the contrary it was 
adopted in all their other works, 
and is now general throughout 
the country. Presumably 
steel-makers have learned to 
overcome the lack of homo- 
geneity against which Mr. 
Carnegie warned the railroads. 

The mechanical superiority 
which the Duquesne works 
showed over every similar plant in 
the country was not enough in it- 
self to offset the deficiencies of The offensive placards. 

management which soon became manifest. There were also 
contentions with labor. The old antagonism to trades-unions 
that brought trouble to the first owners of Homestead, cropped 
out at Duquesne. Signs were put up all over the yards and 
shops announcing that " no union men are allowed on these 
works." When Mr. William G. Park saw them he gave orders 
that such signs as were accidentally destroyed should not be 
renewed. The directors dared not discredit their manager by 
removing the offensive placards ; but they let it be quietly 




178 CAPTURE OF DUQUESNE 

known that a driver who knocked one of them down and de- 
stroyed it would not be punished for carelessness. Some of 
these signs were still in existence when Mr. Frick bought the 
works. 

There were also defects in the operating department ; so 
that large quantities of second- and third-rate rails accumulated 
in the yards. The dissatisfaction of the owners with the man- 
agement was augmented by several serious losses growing out 
of undesirable contracts. In fairness to the managers, however, 
it should be confessed that they were really obliged to take 
these contracts in order to keep running ; for the rail pool, at 
the instigation of the Carnegies, constantly headed them off 
from all desirable business, and obliged them to take such orders 
as no mill in the pool wanted. As a result the stockholders 
were soon called upon for additional capital. First ;^ 100,000 
was called for; then twice as much. This the stockholders 
refused ; and Mr. William G. Park had to pay it all. So that a 
suggestion from Mr. Frick that the Carnegie Company might 
buy the property at a bargain found Mr. Park in a particularly 
receptive mood. 

The price first talked about by Mr. Frick — ^600,000 — was 
considered too low by Mr. Park, as no doubt it was. The works 
had cost nearly twice that sum. They had made as much as 
five hundred tons of rails and billets in twenty- four hours ; and 
while their cost from pig-iron to rails was high — $8.14 in 
October, 1889 — the stockholders were loath to accept any very 
great loss. On the other hand, Mr. Frick showed no disposi- 
tion to increase the bid which he had thrown out in a tentative 
way ; and so the thing dragged on for nearly a year. During 
this time Mr. Park obtained options on his partners' holdings ; 
and when the negotiations were resumed he was able to offer 
the entire stock of his company. During the month of August 
preceding the final sale the output of the rail-mill was the largest 
in its history — 16,814 tons. The output of raw steel was over 
20,000 tons ; and 1 7,000 tons of blooms were made. 



BRILLIANT FLXANCIERING 179 

On this showing Mr. Frick, in October, 1890, raised his 
bid for the plant to $1,000,000 in bonds, material on hand to 
be appraised and paid for in cash. On the 30th of the month 
this offer was accepted ; and a couple of weeks later the plant 
was turned over to the Carnegies. Once more they were with- 
out a rival rail-mill in their own territory. 

At this time the works consisted of two seven-ton converters, 
six cupolas — four for iron and two for spiegel — seven soaking- 




Copyright by S. S. McClure Co. 

Pouring steel from converter into ladle. 

pits, four trains of rolls, and the necessary boilers, engines, and 
other equipment to successfully operate a blooming and rail mill 
of that size. 

It is commonjy believed in Pittsburg that the plant thus 
bought with nothing but an issue of bonds, paid the new owners 
$1,000,000 in the first sixty days. This is not true; but the 
works did pay for themselves within a year, for, with his habit- 
ual foresight, Mr. Frick had provided a market for their prod- 
uct before he bought them. The rail-train was changed to 
make billets ; and these were promptly marketed at good prices. 



i8o CAPTURE OF DUQUESNE 

Before the bonds became due the plant had paid for itself six 
times over ; and the surplus earnings had gone into the construc- 
tion of four large blast-furnaces. 

Mr. Frick always had an instinct for picking out the right 
man for every place; and his intuition did not fail him when 
he selected Thomas Morrison for Duquesne's first superintend- 
ent under the new regime. This young man was a distant con- 
nection of Andrew Carnegie ; but he made no attempt to trade 
the fact for favors. He took a humble place in the machine- 
shops at Homestead, and caught the notice of his superintend- 
ent, Mr. Potter. Mr. Prick's attention having been drawn to 
the youth, he watched him for a while, and decided that he was 
capable of better things than he was doing. Greatly to the 
young man's surprise he was selected for the responsible posi- 
tion of superintendent at Duquesne. Here the men tried to 
take advantage of his youth ; but he met the attempt with dig- 
nity, and, being supported by the firm, had no further trouble 
of that kind. In one of Mr. Prick's weekly reports in June, 
1 89 1, he says: "Matters have been looking threatening at 
Duquesne. Morrison has handled the matter very well. He 
is not much of a talker." In that he was a man after Mr. 
Prick's own heart. 

Early in 1 892 Morrison was instructed to get up plans for 
two blast-furnaces at Duquesne, which he did ; and the same 
month he was given a small interest in the Carnegie Company. 
During this time the plant was being operated as the Allegheny 
Bessemer Steel Company, the former owners not having yet 
closed all the old transactions. By July this had been done; 
and the plant was taken into the consolidation of all the Car- 
negie works that formed the Carnegie Steel Company. 

Owing to the disturbing effects of the Homestead strike the 
two Duquesne furnaces, planned early in 1892, were not com- 
menced until November 5th, 1894. By August of the follow- 
ing year, 1,700 men were at work on them; and the first one 
was blown in on June 8th, 1896. On October 7th the second 



A WONDERFUL RECORD 



i8i 



furnace went into blast. In May, 1897, a third furnace was 
lighted ; and a fourth followed in June. 

Three of these stacks are 100 feet high by 22 feet at the 
bosh. The fourth is the same height and a foot narrower. For 
nearly four years they held the world's record; as much as 
18,809 tons of metal being produced by a single furnace in a 
month. " Then the broom of supremacy, previously flaunted by 




Duquesne furnaces. 

the Lucy, and then by the Edgar Thomson furnaces, passed to 
another Carnegie stack, that known as Carrie No. 3. 

It is worthy of remark that when the Duquesne furnaces 
were put in operation, with all their labor-saving appliances, 
they cut the cost of labor per ton of iron produced to one-half 
that prevailing elsewhere. 

The rivalry started thirty years ago by the Lucy and Isabella 
furnaces still persists. Late in 1901 Carrie No. 3 made 790 
tons in twenty-four hours. A month or so later furnace No. 2 
of the National Steel Company at Youngstown, Ohio, produced 



* In October, i8g8, the output of these four furnaces was as follows: 

No. I 18,672 tons. 

2 17.717 " 

3 18,809 " 

4 18,060 " 



1 82 CAPTURE OF DUQUESNE 

806 tons. This furnace is io6>^ feet high and 23 feet in 
diameter. Later, furnace E at the Edgar Thomson works made 
901 gross tons. It is probable that before these pages are in 
type some more modern furnace will make a thousand tons in a 
day. If so, the difference between the 50 tons that the Lucy 
first made, and i ,000 tons, will mark, in a way easy to under- 
stand, the progress in blast-furnace construction and practice of 
the period covered by this story and the one group of workers 
to which it relates.* 

To describe the further growth of these works in detail 
would take more space than is possible here. They were Mr. 
Frick's pride; and he lavished his best thought upon them. 
Hardly a month passed that did not see some important change 
and addition ; until for economy of operation they stood unri- 
valled among the steel works of the world. Here are the most 
important items in this record of growth and improvement : 

i8g6 — June ii — Purchase of 57 acres of Hays estate adjoining. 

Oct. 9 — Purchase of 65 acres from Oliver estate, including plats 
between railroad and river ; price about $200,000. 
" Nov. 10 — Purchase of 50 acres from Dr. W. S. Huselton for 

$150,000. 
" Dec. 19 — Jones mixer, 200 tons, put in operation ; largest in the 
country. 

1897 — Feb. 2 — Work commenced at Duquesne on Union Railroad. 

" May 6 — No. 3 furnace blown in. 

" June 10 — No. 4 furnace goes in blast. 

" Dec. 19 — Work started on new billet-mill. 

1898 — June I — Union Railroad completed and first run of hot metal 

from Duquesne to Homestead. 
" July 8 — New 16-inch continuous mill put in operation. 
" July 19 — Union Railroad bridge finished, connecting Duquesne 

with Edgar Thomson works. 
" Aug. I — Duquesne tube works sold by sheriff for $141,500 to 

Carnegie Steel Company. 



* At the Lucy furnaces at this date, 1903, the present superintendent, James 
Scott, was employed at the same plant soon after its construction, thirty years ago. 
No man in the Carnegie Steel Company, or indeed anywhere else, has been closer 
to the great changes described than Mr. Scott, and few men have contributed 
more to produce these changes. 



ANTICS OF A METEOR 183 

1899 — Feb. 7 — Howard Glass House and 27 acres purchased for 
$300,000. "* 

Apr. 10 — Coal dock on Monongahela River contracted for. 
" Oct. 6 — New blooming and billet mills and open-hearth plant to 
cost $2,500,000 first publicly announced. 
Nov. 20 — Excavations for open-hearth plant started. 

1900 — Feb. 16 — Plans for new 14-inch continuous billet-mill announced. 
" Apr. 5 — Plans for new 10- and 13-inch double-storage mill an- 
nounced. 
" Oct. I — Two new open-hearth furnaces started. 
" Nov. 27 — 40-inch mill began operations. 
" Dec. 13 — Two more open-hearth furnaces started. 

1 901 — Jan. 2 — Excavations started for new 14-inch mill. 
" Feb. 7 — Excavations for foundations of two new merchant mills. 
" Mar. I — Date of merger with United States Steel Corporation. 

The present capacity of the works is 750,000 tons of pig- 
iron a year, and 600,000 tons of raw steel. The whole of this 
material can be made into finished products on the place. These 
totals are twenty times as great as the first year's output of the 
Edgar Thomson works. In view of the short time in which 
these results have been attained, the enthusiasm of the local 
editor is pardonable, even when — after comparing Duquesne to 
" the meteor that has darted out of space and cut a brilliant 
path across the sky" yet "remains in the horizon, more lus- 
trous than ever," — he calls it "the acknowledged young giant 
and the mastodon of the unconquered and the unconquerable 
Monongahela valley." There is certainly much in Duquesne 
to arouse local pride. 




CHAPTER XIII 

LABOR CONTESTS IN THEORY AND PRACTICE 

THE great Homestead strike, which forms the 
most dramatic episode in the history of all 
the Carnegie enterprises, grew out of con- 
ditions without parallel in the industrial 
history of this or any other country. Su- 
perficially, this contest was a commonplace 
struggle between capital and labor concern- 
ing the equitable division of the results of 
'^^''^^r-!^'"^^ their joint efforts. But behind this were 

a principle. ■> 

certain moral causes, growing out of the con- 
flict between the idealistic platform-theories of Andrew Car- 
negie and the unsentimental exigencies of business. A brief 
glance at the attitude towards labor of Carnegie the manu- 
facturer, as contrasted v/ith the academic utterances of Carnegie 
the philanthropist, is necessary to an understanding of the re- 
moter and more obscure causes of this titanic struggle, which, 
marked as it was with all the ferocity of civil war, caused a 
shudder to run through the civilized world. Incidentally such 
a retrospect will also show that no successful business can be 
built on philanthropic aphorisms. Nor can Utopianism be 
grafted upon an industrial system still rudimentary in its de- 
velopment, without producing fruit of an unexpected and inju- 
rious variety. 

The first strike in the history of the Carnegie iron business 
was that of 1867, when, as has been related, the puddlers 
resisted a reduction of wages. This was ended by a sudden 
boom in the iron trade which called all idlers back into the 

shops at better wages than before. The Carnegies, however, in 

184 



PHILANTHROPIC POSTURING 185 

common with other manufacturers, had attempted to break the 
strike by the wholesale importation of foreign labor. While at 
this time there was no open hostility on the part of the manu- 
facturers to labor-unions per scy there was also no public glori- 
fication of them. As for Carnegie himself, his influence was 
too unimportant to have much effect on his partners ; but so 
far as is known, the business man was still dominant in the 
dual personality which later puzzled partners and workmen 
alike by an altruism never before professed by any employer. 

At the end of 1875, just after the starting of the Edgar 
Thomson works, mutterings of discontent were heard amongst 
the men, and a strike became imminent. During the few weeks 
that the plant had been in operation some minor weaknesses 
and defects had shown themselves in the machinery ; and, to 
remedy these, the excuse offered by the discontent of the men 
was seized upon to shut down the works. Stunned into sub- 
mission by the swiftness of the blow, the men readily signed 
the agreement presented to them by the company before they 
were allowed to return to work; and the lesson thus learned 
lasted long. Many years of peace supervened at the Edgar 
Thomson works. There was still no philanthropic posturing. 
It was all business, and very properly so. 

In July, 1884, the Carnegies had a strike at their Beaver 
Falls mill. This plant, known as the Hartman Steel Works, 
was an unimportant but costly side-issue growing out of an 
effort to find new markets for raw steel. Designed to lead the 
world in nails and wire rods, the enterprise was an unqualified 
failure from the start ; and, except for a brief period under the 
management of Mr. P. R. Dillon, it remained so to the end, 
when it was cleverly sold by Mr. Prick to the Wire Trust, and 
closed and dismantled. The strike referred to was a frank trial 
of strength between the Carnegies and the Amalgamated Asso- 
ciation. Andrew Carnegie entered upon it with many misgiv- 
ings, telling Hartman, his partner, that no one could success- 
fully fight the Amalgamated Association " within the smoke of 



1 86 LABOR CONTESTS 

Pittsburg." Hartman thought otherwise; and, being empow- 
ered to carry the fight to a finish, did so in excellent style and 
won a complete victory over the labor organization. The con- 
test had all the usual features — the importation of workmen 
from other districts, followed by rioting among the strikers, at- 
tacks on the "black sheep," and the arrest, trial, and conviction 
of the rioters. There was no display of sentimentality among 
the owners; and the labor-union was temporarily crushed out 
of the mill. 

The folly of thus crippling a labor organization that gave 
the Carnegies an advantage in their iron works over competitors 
whose plants were less favorably located, was not yet recognized. 
With the possible exception of Mr. Walker, none of the Carne- 
gie partners seemed aware of the economic principle underlying 
the Amalgamated Association's requirement of uniform wages 
for the same class of work regardless of other conditions — a 
principle that inured to the advantage of the best-equipped and 
most favorably located plants. Given a uniform price of labor 
throughout the country, the Pittsburg iron-mills, by reason of 
their proximity to coal and ore, and their unequalled transporta- 
tion facilities, possessed enormous advantages over competitors 
in other districts; and an enlightened business policy would 
have encouraged any organization that, without unduly interfer- 
ing with the management, kept the cost of labor down to the 
level of that possible in the worst-equipped and least favorably 
situated works in the country. Recognition of this principle 
came later; and brought a change in the company's treatment 
of labor organizations. But unfortunately the change was 
credited to humanitarian motives, instead of being frankly stated 
as a business principle; and there inevitably arose conflicts 
between the ideal and the real — between Andrew Carnegie's 
philanthropy and his material interests. 

In 1885 Andrew Carnegie made his first public address, 
and began that series of lectures and essays on the natural 
rights of labor with which his name has since been identified. 



''TRIUMPHANT DEMOCRACY'' 187 

A year later Triumphant Democracy was published. Ostensi- 
bly a record of the material progress of the United States dur- 
ing the preceding fifty years, this book was made a vehicle for 
the advanced views of Carnegie on the political and social 
equality of all men. It was also a glorification of the toiler. 
The book attained a large circulation, especially among work- 
ingmen, who were enabled to buy it at a nominal cost through 
their labor organizations. 

In the same year he also published, in the Forum, an essay 
on the relations of capital and labor, in which appeared the 
following paragraph : 

" While public sentiment has rightly and unmistakably con- 
demned violence even in the form for which there is the most 
excuse, I would have the public give due consideration to the 
terrible temptation to which the workingman on a strike is 
sometimes subjected. To expect that one dependent upon his 
daily wage for the necessaries of life will stand by peaceably 
and see a new man employed in his stead is to expect much. 
This poor man may have a wife and children dependent upon 
his labor. Whether medicine for a sick child, or even nourish- 
ing food for a delicate wife, is procurable, depends upon his 
steady employment. In all but a very few departments of labor 
it is unnecessary and I think improper to subject men to such 
an ordeal. In the case of railways and a few other employments 
it is, of course, essential for the public wants that no interrup- 
tion occur, and in such case substitutes must be employed ; but 
the employer of labor will find it much more to his interest, 
wherever possible, to allow his works to remain idle and await 
the result of a dispute than to employ a class of men that can 
be induced to take the place of other men who have stopped 
work. Neither the best men as men, nor the best men as 
workers, are thus* to be obtained. There is an unwritten law 
among the best workmen: 'Thou shalt not take thy neighbor's 
job.'" 

Lofty in spirit and purpose as this essay was, its humani- 
tarian intent was grossly perverted by the labor agitator ; and 
its broad and liberal principles were garbled so as to seem an 
authoritative excuse for violence. Unfortunately for the work- 



1 88 LABOR CONTESTS 

men of Braddock and Homestead, they mistook these high phil- 
anthropic views for the serious designs of their employer towards 
themselves; and this misunderstanding was intensified by Car- 
negie's method of ending the coke strike, mentioned later, and 
also by an incident which happened about this time at Braddock. 
This was somewhat as follows : 

On account of some grievance the women employed in the 
Pittsburg laundries refused to work, and enlisted the aid of the 
Knights of Labor to keep other women from taking their places. 
The Knights of Labor went to Captain Jones and demanded 
the discharge of an old Carnegie employee, whose two daugh- 
ters were working in one of the proscribed laundries, Jones 
refused in that sonorous language with which he was so highly 
gifted. The matter was thereupon taken direct to Mr. Carne- 
gie, who ordered the man's dismissal, with the remark, " We 
cannot afford a strike for a principle." At the same time he 
ordered the old man's wages to be continued for a couple of 
months. Strange to say, the sturdy old fellow refused them. 

No one was more surprised at this compliance with their 
demand than the Knights of Labor themselves ; and its effect 
on this dictatorial organization was most disastrous for the Car- 
negies. Within a little while they had a strike of their own as 
a result of the meddling of the leaders of this most offensive of 
all labor-unions. 

In Captain Jones' statement of the causes of the great out- 
put of the Edgar Thomson works, quoted in a previous chapter, 
he says : 

" I soon discovered it was entirely out of the question to 
expect human flesh and blood to labor incessantly for twelve 
hours, and therefore it was decided to put on three turns, reduc- 
ing the hours of labor to eight. " 

He adds that 

" this proved to be of immense advantage to both the company 
and the workmen, the latter now earning more in eight hours 



ANDREW CARNEGIE'S PINKERTONS 189 

than they formerly did in twelve hours, while the men can work 
harder constantly for eight hours-, having sixteen hours for rest." 



Jones' praiseworthy effort to amend the lot of the laborer was 
afterwards found to put the Edgar Thomson works at a disad- 
vantage with competing establishments where two twelve-hour 
turns were the rule; and an effort was made in 1887 to induce 
the Edgar Thomson men to return to the old system. At the 
same time a sliding scale of wages was proposed, similar to 
that which had been found successful in the North Chicago 
rolling-mill and in the Crescent Steel Works at Pittsburg. The 
men were willing to accept the sliding scale ; but they were 
unwilling to return to the twelve-hour system. The usual 
strike resulted ; but before it had gone far a committee of the 
strikers went to see Mr. Carnegie at the Windsor Hotel, New 
York. There he reasoned with them, and talked them into a 
conciliatory frame of mind ; and they agreed to sign the con- 
tract he put before them. The affair seemed to have reached a 
happy conclusion ; and the labor leaders left for Pittsburg in 
the best of spirits. As Mr. Carnegie bade them good-bye, he 
pressed into the hands of each a copy of his Forum essay. This 
the men read on the train ; and on their arrival at Braddock 
they promptly repudiated the agreement they had signed and 
continued the strike. 

Mr. Carnegie made no effort to conceal his disappointment 
and chagrin. Summoning Captain Jones to New York, a brief 
conference was held at the Windsor; and from there Jones 
went over to Philadelphia and engaged a little army of Pinker- 
ton guards for service at Braddock. Then Mr. Carnegie retired 
to Atlantic City, where he was kept posted as to the current of 
events by his cousin, George Lauder. 

Under the protection of Pinkerton guards the works were 
now put in operation by non-union men. The usual disorders 
took place, resulting in a slight loss of life ; but eventually the 
contest was won by the company. The struggle lasted from 



IQO LABOR CONTESTS 

December, 1887, till May, 1888. Thus ended the eight- hour 
day in a night of sorrow and suffering. 

Unfortunately the effect of this incident did not end with 
the strike. It is being used in 1903 as an argument against 
the compulsory eight-hour day which Congress is now consid- 
ering; so that this great step in the elevation of the laborer 
will probably be delayed by Jones' unlucky experiment. 

Andrew Carnegie's later opinion of the Knights of Labor, 
whom he blamed for the untoward result of his efforts at 
conciliation, was not very high. When asked by an English 
reporter if we have not such an organization in America as the 
Knights of Labor, he replied with emphasis : 

" Say rather we had. It was one of those ephemeral organi- 
zations that go up like a rocket and come down like a stick. 
It was founded upon false principles, viz., that they could com- 
bine common or unskilled labor with skilled." 

The coke strike, to which reference has been made, also 
took place in 1887. This at first was a matter of wages pure 
and simple; but, as in so many contests between master and 
workmen, higher considerations were soon involved. 

As has been related, the Carnegies bought a large interest 
in the H. C. Frick Coke Company in 1882, In 1886, by the 
withdrawal of two of Mr. Prick's earlier associates, this interest 
was largely increased; and the Carnegies acquired a majority 
of the coke company's stock. For the regulation of output and 
to control competition, the coke operators of the Connellsville 
region had some sort of a gentlemen's agreement ; and when, in 
1887, trouble concerning wages arose, these owners acted in 
unison, and all conferences with the workmen's unions were 
conducted by a joint committee. By agreement with the trades- 
unions — the Knights of Labor and the Miners' and Mine 
Laborers' Amalgamated Association — the matters in dispute 
were submitted to arbitration. The Board of Arbitration con- 
sisted of two members appointed by the manufacturers, two by 



BAD FAITH ALLEGED 191 

the labor-unions, and these four elected a fifth, who was to 
serve as umpire in case of a failure of the whole board to reach 
an understanding. This contingency arising, the decision was 
left to the umpire ; and his award, when issued, was unfavor- 
able to the men. Thereupon a strange condition arose. The 
main bodies of the labor-unions accepted the umpire's judgment, 
as in good faith they were required to do ; but the local lodges 
denounced it as "unjust and unwarranted," and refused to be 
bound by it. A strike ensued, which the Knights of Labor 
called illegal; and, as if to further justify the characterization, 
the men resorted to all the old-time acts of violence. Men who 
were willing to work were maltreated and shot; dynamite was 
used to blow up the mines ; machinery was destroyed, and thou- 
sands of tons of coke were allowed to spoil in the ovens. 

It was at this stage that Carnegie cabled from Scotland a 
positive order to accede to the strikers' demands ; and, as he 
and his partners controlled the Frick Coke Company, the order 
was carried out regardless of outstanding obligations to the 
other manufacturers. Naturally the defection of the most im- 
portant member of the group excited in the rest the bitterest of 
feelings; and Mr. Frick promptly resigned the presidency of 
the company which bore his name but which he no longer con- 
trolled. The rest of the manufacturers set their teeth and 
continued the struggle ; and, to the surprise of everybody, finally 
gained a complete victory over their men. 

The apparent act of bad faith on the part of the Carnegies 
received universal condemnation. It was ranked above that of 
the strikers who had repudiated the decision of their umpire. 
The breaking up of the combination was also deplored because 
it involved demoralization of prices on which the wages ulti- 
mately depended ; so that in the long run the workmen would 
suffer by the act. But those who made these criticisms did not 
consider the risk which the Carnegies ran in banking up their 
blast-furnaces. The best furnace will not stand banking for 
more than three months ; and during this time there is always 



192 LABOR CONTESTS 

a danger of its becoming chilled. When this happens it has to 
be blown out, and partially if not wholly relined at a cost of at 
least ;^3 5,000. At this date the Carnegies had seven furnaces 
banked ; so that there was almost a quarter of a million dollars 
in hourly peril. In addition, there was a positive loss amount- 
ing to many thousands of dollars daily through the stoppage of 
iron production, and further losses in the steel-mill through lack 
of material. On the other hand, the advantage which the Car- 
negies would have over competing iron manufacturers by get- 
ting a regular supply of coke and continuing work while all 
others were idle, was one almost beyond compute. While this 
alone might not tempt the average manufacturer to a breach of 
faith, it would do much to console him for it if other conditions 
produced it. 

Of course the workmen were not informed as to all the 
reasons which prompted the Carnegies to yield to their de- 
mands ; and they not unnaturally supposed that their victory was 
due, in some mysterious way, to the inalienable rights of labor 
and all the other pretty texts with which they had become 
familiar. There is no doubt that this misunderstanding gave 
rise to the frightful disorders that ensued, three or four years 
later, in the same region. 

The settlement just narrated was made in July, 1887. From 
that time until early in 1890 the H. C. Frick Coke Company 
paid twelve and one-half per cent, more for labor than did other 
operators. In February, 1890, however, a general scale was 
agreed upon covering wages in the Connellsville region under 
which all operators paid the same rate. This scale expired a 
year later; and the men refused to sign the new one designed 
in continuation of it. After repeated conferences, at which no 
agreement was reached, an effort was made to start the mines 
and ovens with new workmen. For three months the whole 
region was given over to rioting, arson, and murder. Armed 
mobs attacked the mines and coking plants, killing and maim- 
ing the workers, destroying the machinery, and defying the 



ETIQUETTE FOR STRIKERS 193 

county officials who sought to bring order out of the industrial 
chaos. Gangs of men marched through the night terrorizing 
the peaceful members of the community ; and when deputy 
sheriffs attempted to arrest them, the strikers assumed military 
formations and shot their pursuers at sight. One such body 
marched across a large extent of the country, occasionally 
brought to bay, when battle was given and taken with all the 
tactics of irregular warfare. In this guerilla-like march and 
pursuit eight of the strikers were killed and many more were 
seriously wounded. As the Carnegies had a fair supply of coke 
on hand at the outbreak of hostilities, and as the prices of steel 
and rails were low, the war was fought to the bitter end. 
Eventually the rioters were caught or driven out of the region, 
and others willing to accept the wages they refused received 
adequate protection. 

A year after the establishment of peace came the Home- 
stead strike. In the mean time, however, Mr. Carnegie's Forum 
essay, in the hands of undiscrimmating workmen, had become 
a veritable manual of etiquette for strikers. The last quoted 
sentence, the Carnegie contribution to the decalogue, became 
in its terse and picturesque vigor, the most understandable of 
all the tenets of ** the little boss; " and there was no Slav nor 
Hungarian at Connellsvilleand Homestead so mean of intellect 
as not to realize its full purport. As for the Knights of Labor, 
over whom Mr. Carnegie had pronounced so slighting a funeral 
oration, they sprang to a joyful resurrection with this text as 
their watchword : " Thou shalt not take thy neighbor's job. " 

Before proceeding to a review of the immediate causes of 
the greatest of all the Carnegie struggles with labor, it is fit- 
ting that a glance should be given at the material conditions 
surrounding the workmen at Homestead. To this end may be 
quoted the sympathetic summary of a description of the men at 
work which is published in Bernard Aldcrson's biography of 
Mr. Carnegie under the latter's own supervision : 
13 



194 



LABOR CONTESTS 



"Thus far," says Mr. Alderson, "we have studied Mr. Car- 
negie in theory. Now let us see how he has put all these ad- 
mirable sentiments and unimpeachable principles into practice. 
The best test that can be applied is the condition of labor sur- 
rounding his own workmen. Mr. Hamlin Garland, a well- 
known writer, though having no technical experience, describes 
the impressions he received from a visit to the Homestead 
works. His training as a novelist naturally impelled him 

to look at things from 
the descriptive writer's 
point of view, and not 
become interested in the 
picturesque, both horri- 
ble and attractive. In 
his approach to Home- 
stead Mr. Garland was 
struck by the desolate 
appearance of the dis- 
trict, and the wretched- 
ness of the town itself, 
he says, was deplorable. 
'The streets were hor- 
rible ; the buildings 
were poor; the side- 
walks were sunken and 
full of holes; and the 
crossings were formed 
of sharp-edged stones 
like rocks in a river- 
bed. Everywhere the 
yellow mud of the 
streets lay kneaded into 
sticky masses, through 
which groups of pale, 
lean men slouched in 
faded garments, grimy with the soot and dirt of the mills. 
The town was as squalid as could well be imagined, and the 
people were mainly of the discouraged and sullen type to be 
found everywhere where labor passes into the brutalizing stage 
of severity. ' 

These depressing conditions are apparently inseparable from 
a newly established iron or steel mill in any locality, and this 
is especially true where soft coal is used. Grime, heat, hard, 
exhausting labor, these are conditions that are to be found in 




Copyriffht by S. S. McClure Co. 

Looks like hard work." 



"A DOG'S LIFE" 195 

every steel-mill, and the works o^ the Carnegie Company differed 
little from other manufactories of the same kind except in ex-- 
tent, but it may be truly said that the larger the mill the more 
depressing the conditions. 

After commenting on the muggy, smoke-laden atmosphere, 
he [Garland] proceeds to describe the conditions inside the 
mills, and the men engaged at their tasks, and tells us that they 
worked with a sort of desperate attention and alertness. 

'That looks like hard work,' I said to one of them to whom 
my companion introduced me. He was breathing hard from 
his labor. 

'Hard! I guess it's hard. I lost forty pounds the first 
three months I came into the business. It sweats the life out 
of a man. I often drink two buckets of water in twelve hours ; 
the sweat drips through my sleeves and runs down my legs and 
fills my shoes.' 

'But that isn't the worst of it, said my guide, a former 
employee. 'It's a dog's life. Now those men work twelve 
hours, and sleep and eat out ten more. You can see a man 
don't have much time for anything else. You can't see your 
friends or do anything but work. That's why I got out of it. 
I used to come home so exhausted, staggering like a man with 
ajag!'" 

With this picture in mind it is worth while to quote from 
Mr. Alderson's preceding page a characteristic phrase from 
Andrew Carnegie : 

" The lot of a skilled workman," he says, " is far better than 
that of the heir to an hereditary title, who is very likely to lead 
an unhappy, wicked life." 

Little wonder that the skilled workman, with the sweat 
dripping through his sleeves and running down his legs and 
filling his shoes, failed to understand the man in whose inter- 
est he was making such terrific exertions. " Kind master," he 
cabled during the strike, " tell us what you want us to do and 
we will do it ! " 

"Again and again he [Hamlin Garland] is impressed," con- 
tinues Mr. Alderson, " with the general appearance of exhaus- 
tion that is shown in the haggard faces of the toilers, and he 
says 'their work is of the sort that hardens and coarsens.' 



196 



LABOR CONTESTS 



Everywhere in the enormous sheds were pits gaping like the 
mouth of hell, and ovens emitting a terrible degree of heat, with 
grimy men filling and lining them. One man jumps down, 
works desperately for a few minutes, and is then pulled up, ex- 
hausted. Another im- 
mediately takes his place ; 
there is no hesitation. 
When he spoke to the 
men they laughed. It 
was winter when he made 
his visit. They told him 
to come in the summer, 
during July, when one 
could scarcely breathe. 
An old workman, relat- 
ing the experience of his 
first day's toil, says he ap- 
plied for work, and the su- 
perintendent, saying he 
looked strong and tough, 
set him on the pit work. 
For the first time in his 
life he fainted repeatedly, 
and when he left at night 
he could scarcely drag 
himself home. 

They take great risks, 
too; and the injuries sustained are of a most frightful char- 
acter. An explosion in the pouring of the molten metal, and 
half-a-dozen men are terribly mangled and one or two killed. 
Such incidents are not infrequent. The continuous dread of 
an accident, combined with the intense drive of the work, 
constitute a fearful strain. This is a fearful picture, painted 
in the darkest, most repulsive colors, but this is but one 
side of it. Nothing is said of the comfortable homes which 
steady employment at from four to ten dollars a day enable 
the steady, sober workman to maintain — the self-confidence 
that continuous employment begets. The environments of 
the mills were improved as rapidly as possible, streets were 
paved, schools were established, and public institutions of 
various kinds were initiated. Several free educational institu- 
tions were founded by Mr. Carnegie in an attempt to help his 
workmen help themselves. The other side of the picture is 
full of light and hope, though there are many exceptions. 




Copyright b.v S. S. Mi-Cluro Co. 

Preferable to a peerage. 



DANTES INFERNIO 



97 



Many of the men have happy families, and those of the better 
class are very well off. Th^ company houses are very good, 
and have all modern conveniences, and the men who are sober 
and care for their families, besides being prosperous live 
comfortably. 

The effect of the work on these men was brought out in 
a conversation which Mr. Garland had the morning after his 
visit to the mills. 'The worst part of the whole business,' said 
the workman, *is, it brutalizes a man. You can't help it. You 
start to be a man, but you become more and more a machine, 
and pleasures are few and far between. It's like any severe 
labor; it drags you down mentally and morally just as it does 
physically. I wouldn't mind it so much but for the long hours. 
Twelve hours is too long.' " 



Allowing for a certain journalistic exaggeration this lurid 
picture is a fairly truthful one. But in the glare of furnace 
fires shadows loom big and black ; and these have caught the 
journalist's attention. The fierce heat, the ruddy light, the 
tense, stripped figures 
of the workers, in- 
evitably suggest 
Dante's Inferno; and 
thoughts of bodily 
suffering and mental 
anguish come to the 




onlooker in the nat- 
ural sequence of asso- 
ciated ideas. Greater 
familiarity with the 
processes of open- 
hearth steel-making 
would have given Mr. 
Garland the means of distinguishing subjective impressions 
from outside facts. If a furnace man drinks two buckets of 
water in twelve hours, the sweat will run down his legs and into 
his shoes ; and while his condition may not be preferable to that 
of an heir to a peerage, it may yet be free from bodily suffering. 



Copyrlj{ht by S. S. MtCluie Co. 

"More and more a machine." 



198 



LABOR CONTESTS 



It is, however, this peerage idea and others akin to it which, 
coming with all the glamour of the Carnegie name into such 
works as those just described, wrought trouble for the managers, 
and did more than any one thing to make the men obstinate 
and unreasonable. The man who climbs down into the pit to 
break up the red-hot slag is not himself an idealist, nor has he 
the mental equipment to make necessary allowances for the 

enthusiastic ideal- 
ism of another. In 
his hands Trium- 
phant Democracy be- 
came not the gospel 
of a universal eman- 
cipation it was in- 
tended to be, but a 
special message of 
independence from 
his master to him- 
self. The exaltation 
of labor turned the 
laborer's head ; and he 
gravely accepted the 
tributes to his superi- 
ority with which the 
mere capitalist en- 
dowed him. This was shown a hundred 
times during the strike, when the men 
thought that all they had to do was to let Andrew Carnegie in 
Scotland know what his wicked managers at Homestead were 
doing, for him to order its discontinuance by cable. 

Concerning the difficulties under which the Board of Mana- 
gers constantly labored through this tendency of their chief to 
talk for publication, Mr. Lauder, his cousin, relates how he 
once told the following parable to Mr. Carnegie. It is more 
grewsome than funny, but it has a moral. 




"Not an idealist." 



LAUDER'S GREW SO ME STORY 199 

Once upon a time a man goUided with a street car. The 
remains were collected and built up into some human sem- 
blance, and placed on view in the undertaker's for identifica- 
tion. After a while a lady drove up and claimed the corpse as 
that of her husband ; and she ordered the handsomest funeral 
that money could buy, with flowers, plumes, and every costly 
accessory to mourning. As she was about to leave the estab- 
lishment, the undertaker's assistant, in hastening to open the 
door for her to pass, gave a jar to the slab on which the de- 
ceased reposed; and the dead man's jaw fell open, revealing a 
golden tooth. At sight of this the lady hurriedly counter- 
manded the orders she had given for the imposing obsequies, 
saying that she saw by the golden tooth that she had made a mis- 
take and that it was not her husband after all. As she passed 
out of the door, the disappointed undertaker turned and apostro- 
phized the deceased. " What kind of an idiot are you anyway } 
If you'd only known enough to keep your mouth shut — ! " 

Mr, Carnegie, who tells so many stories on others, laughed 
heartily and promised to moderate his speech-making. 

Coming now to the more immediate causes of the great strike 
of 1892, mention should be made of the difficulties which pre- 
ceded it in 1889, when the sliding scale of wages first went into 
effect at Homestead. 

Up to the summer of 1889, the wages of workers making 
merchant steel, or steel to take the place of merchant iron, had 
not been put upon a settled basis. At first the work was done 
in iron-mills; and after some discussion the same wages were 
paid as were given for working iron. With the building of 
mills especially to work Bessemer and open-hearth steel into 
merchant sizes and shapes, and with their improved machinery 
and appliances, the output per worker was very largely in- 
creased ; and as the wages were based on tonnage, earnings had 
grown beyond all reason. Rollers and heaters, for instance, 
were earning from five to ten times as much as the skilled 



200 



LABOR CONTESTS 



mechanics who had erected the machinery on which the former 
worked. A general reduction amounting to about twenty-five 
per cent, was therefore proposed by the firm ; and a sugges- 
tion was made for the automatic regulation of future wages by a 
scale which should follow, from month to month, the movements 
of the prices received by the firm for raw steel. This was 
naturally resisted by the tonnage men ; and both sides prepared 
for the struggle which seemed unavoidable. 

On the Carnegies' side these preparations took on some- 
what of an opera-bouffe character. Detectives in greasy caps 
and smutty clothes were sent into the local stores and saloons, 

where they sat on barrels or 
stood at bars listening to 
the workmen's talk. They 
sought lodgings in the town, 
and talked with wives and 
mothers ; and the gossip 
thus picked up was sent to 
New York, where Andrew 
Carnegie read it surrounded 
by the humanitarian texts 
and quaint heraldic devices 
in honor of the toiler with 
which he had covered his library walls. Then he planned a 
strenuous campaign for his partners, and went to Scotland. 

The result was very much as if Napoleon had attempted 
the conquest of the Rhine provinces from Josephine's bower in 
the Tuileries. A hundred or more deputy sheriffs, picked off 
the streets of Pittsburg, went up to Homestead, where they 
were met by the strikers, relieved of their maces, caps, and coats, 
and sent back home. And this was the comedy out of which 
grew the tragedy of Homestead. 

Henry Clay Frick was not yet in full control ; and the work- 
men interpreted the weakness and vacillation of the company 
as fresh expressions of the benevolent theories of " the little 




A duLcctive. 



DEPUTY SHERIFFS ROUTED 201 

boss," The discomfiture of the deputy sheriffs was followed 
by a conference with the leaders of the strikers' union, the 
Amalgamated Association of Iron and Steel Workers of the 
United States, and again the firm received a defeat. Mr. 
Abbot, who conducted the negotiations for the Carnegies, pro- 
claimed that " both sides are victors, and both sides are proba- 
bly vanquished in minute details." The principle of the sliding 
scale was accepted by the men ; but instead of a monthly adjust- 
ment of prices, as the Carnegies first demanded, the rate was 
fixed for six months, and " the average price of said six months 
shall be the basis upon which wages shall be paid for the next 
three months, the rate to change every three months thereafter 
based upon the average price of the preceding three months." 
This excellent rule was nullified by numerous exceptions, which 
led to constant bickerings and disputes for the next three years. 
In many departments the rate of payment was left unchanged 
— with more exceptions. These exceptions, in the form of 
foot-notes, were more numerous in the agreement than the 
rules they were designed to elucidate. The old force of men 
was retained ; but where places could be found for any of the 
newcomers no objection was to be made to them. 

The organ of the labor-unions, commenting on this settle- 
ment, remarked that the Amalgamated Association now "stands 
head and shoulders higher than ever before, for it comes out of 
one of the most difificult crises in its history intact, with honor 
and with the renewed confidence of the public. It is a victory 
to the association, for thoroughly prepared as that body was to 
pursue the contention to the bitter end, yet in the midst of hours 
when minds were "naturally inflamed conciliation prevailed, and 
the strength and usefulness of organization were demonstrated. 
It is a victory for the firm in that the management displayed 
reason, substitutmg as they did concession for the 'ultimatum. ' " 

And verily the " concession " thus substituted was far-reach- 
ing beyond anything ever dreamed of by the management. 
Every department and sub-department had its workmen's " com- 



202 LABOR CONTESTS 

mittee," with a " chairman " and full corps of officers, who, 
fearing that their authority might decay through disuse, were 
ever on the alert to exercise it. During the ensuing three 
years hardly a day passed that a " committee " did not come for- 
ward with some demand or grievance. If a man with a desira- 
ble job died or left the works, his position could not be filled 
without the consent and approval of an Amalgamated commit- 
tee. Usually this committee had a man in waiting for it ; and 
the firm dared not give it to any one else. The method of ap- 
portioning the work, of regulating the turns, of altering the ma- 
chinery, in short, every detail of working the great plant, was 
subject to the interference of some busybody representing the 
Amalgamated Association. Some of this meddling was special 
under the agreement that had been signed by the Carnegies, 
but much of it was not ; it was only in line with the general 
policy of the union. This is shown by the constitution of the 
Amalgamated Association, in which, to take an instance from 
its rules for puddling-mills, it was provided that " when a va- 
cancy occurs in the boiling department the oldest boiler, if he 
so desires, shall have the preference of the furnace so vacated." 
The heats of a turn were designated, as were the weights of the 
various charges constituting a heat. The product per worker 
was limited; the proportion of scrap that might be used in 
running a furnace was fixed ; the quality of pig-iron was stated; 
the puddlers' use of brick and fire clay was forbidden, with ex- 
ceptions ; the labor of assistants was defined ; the teaching of 
other workmen was prohibited; nor might one man lend his 
tools to another except as provided for. And under similar 
irksome regulations the Carnegie managers conducted their 
business for three years, losing money on almost every ton of 
ingots, blooms, and billets turned out. During this time some 
of the men earned from $\2 to ^15 a day; and Homestead be- 
came familiar with the sight of steel-workers being driven to 
the mill in their carriages. Thus did their lot become compa- 
rable to that of an heir to the peerage. 



CHAPTER XIV 



THE HOMESTEAD BATTLE 




Strikers arresting a news- 
paper correspondent. 
— From Harper'' s Weekly. 



THE chagrin experienced by Andrew 
Carnegie at the unsatisfactory outcome 
of his plans in 1889 was forcibly ex- 
pressed in many of his characteristic 
letters to Pittsburg during the three- 
year term of the agreement with the 
Amalgamated Association ; and as 
the time approached for its revision 
measures were taken to avoid a repeti- 
tion of the former fiasco. What these 
were may now be frankly stated. 
The injudicious attempts of Mr. Carnegie's literary friends 
to deprive him of his proper share of the honor or responsibil- 
ity of planning the discomfiture of the Amalgamated Associa- 
tion, joined to his own modest disclaimers, have led to much 
mystification in the public mind concerning his real position 
in the matter. It is time to let in the light on this much- 
debated question. 

On April 4th, 1892, nearly three months before the expira- 
tion of the agreement with the Amalgamated Association, An- 
drew Carnegie sent to Pittsburg the draft of a notice to the 
Homestead employees. Mr. Frick, who was to be chairman of 
the consolidated Carnegie Steel Company, then in process of for- 
mation, disapproved of this notice, so that, despite Mr, Car- 
negie's wishes, it was never issued, and has never before been 

published. It is as follows : 

203 



204 THE HOMESTEAD BATTLE 



ANDREW CARNEGIE, 

5 West 51st St. 



New York, April 4, l8g2. 



NOTICE 

TO EMPLOYEES AT HOMESTEAD WORKS. 

These Works having been consolidated with the Edgar 
Thomson and Duquesne, and other mills, there has been forced 
upon this Firm the question Whether its Works are to be run 
* Union' or 'Non-Union.' As the vast majority of our em- 
ployees are Non-Union, the Firm has decided that the minor- 
ity must give place to the majority. These works therefore, 
will be necessarily Non-Union after the expiration of the pres- 
ent agreement. 

This does not imply that the men will make lower wages. 
On the contrary, most of the men at Edgar Thomson and Du- 
quesne Works, both Non-Union, have made and are making 
higher wages than those at Homestead, which has hitherto been 
Union. 

The facilities and modes of working at Homestead Works 
differ so much from those of steel mills generally in Pittsburgh 
that a scale suitable for these is inapplicable to Homestead. 

A scale will be arranged which will compare favorably with 
that at the other works named ; that is to say, the Firm intends 
that the men of Homestead shall make as much as the men 
at either Duquesne or Edgar Thomson. Owing to the great 
changes and improvements made in the Converting Works, 
Beam Mills, Open Hearth Furnaces, etc., and the intended run- 
ning of hot metal in the latter, the products of the works will be 
greatly increased, so that at the rates per ton paid at Braddock 
and Duquesne, the monthly earnings of the men may be greate.r 
than hitherto. While the .lumber of men required will, of 
course, be reduced, the extensions at Duquesne and Edgar 
Thomson as well as at Homestead will, it is hoped, enable the 
firm to give profitable employment to such of its desirable em- 
ployees as may temporarily be displaced. The firm will in all 
cases give the preferences to such satisfactory employees. 

This action is not taken in any spirit of hostility to labor 
organizations, but every man will see that the firm cannot run 
Union and Non-Union. It must be either* one or the other. 



CARNEGIE'S UNCOMPROMISING ATTITUDE 205 

On his original draft of this notice Mr. Carnegie adds : 
" Should this be determined upon, Mr. Potter [the superin- 
tendent] sJiould roll a large lot of plates ahead, which can be 
finished, should the works be stopped for a time." 

At this time an exchange of views had taken place between 
the Amalgamated Association and the firm ; and the workmen 
had been given till June 24th to definitely decide whether they 
would accept a new agreement embodying certain reductions in 
the wage- scale. Before any word had been received from the 
workmen's organization Mr. Carnegie went abroad; and on June 
loth he sent a long letter setting forth his views as to the con- 
duct and possible outcome of the negotiations. The part relat- 
ing to these is as follows : 

CowoRTH Park, 
sunningdale, 

Berks. 
June 10, 1892. 

"As I understand matters at Homestead, it is not only the 
wages paid, but the number of men required by Amalgamated 
rules which makes our labor rates so much higher than those 
in the East. 

Of course, you will be asked to confer, and I know you will 
decline all conferences, as you have taken your stand and have 
nothing more to say. 

It is fortunate that only a part of the Works are concerned. 
Provided you have plenty of plates rolled, I suppose you can 
keep on with armor. Potter will, no doubt, intimate to the men 
that refusal of scale means running only as Non-Union. This 
may cause acceptance, but I do not think so. The chances are, 
you will have to prepare for a struggle, in which case the notice 
\i.e. that the works are henceforth to be non-union] should go 
up promptly on the morning of the 25th. Of course you will 
win, and win easier than you suppose, owing to the present 
condition of markets." ...... 

Andrew Carnegie. 

Notwithstanding Mr. Carnegie's desire, thus expressed on 
June loth, that no further conference should be held with the 
workmen, Mr. Frick, in his anxiety to avoid open conflict, met 



2o6 THE HOMESTEAD BATTLE 

Mr. Weihe, the president of the Amalgamated Association, and 
a committee of about twenty-five men from Homestead on June 
23d. The conference lasted from ten o'clock in the morning 
until late in the afternoon ; and resulted in Mr. Prick's making 
an important concession on one of the three points of differ- 
ence between the firm and the men. Neither side being willing 
to yield on other points, the conference broke up and prepara- 
tions were made for the struggle. 

In the mean time other letters had been received from Mr. 
Carnegie, showing his uncompromising attitude towards the 
labor-union. Writing from Coworth Park, Sunningdale, Berks, 
on June 17th, 1892, he underlined a passage as follows: 

" Perhaps if Homestead men understand that 11071- acceptance 
means Non-Union forever, they will accept." 

Again on June 28th, he wrote, also from Coworth Park, 
Sunningdale, Berks : 

'* Cables do not seem favorable to a settlement at Home- 
stead. If these be correct, this is your chance to reorganize 
the whole affair, and some one over Potter should exact good 
reasons for employing every man. Far too many men required 
by Amalgamated rules. 

From indications, I cannot resist the conclusion that the 
'Force Report' has not received necessary attention at Home- 
stead, but I see you are pegging away on the right track." 

The outstanding differences between the firm and its work- 
men at this time were truly insignificant ; and there is no doubt 
they would have been promptly settled but for the fact that the 
general rolling-mill scales were also under discussion; and the 
Amalgamated Association feared that any concessions at Home- 
stead would weaken them in their contest with the iron- 
mills throughout the country. The questions involved were 
these : 

First, a reduction in the minimum of the wage-scale. This 
was based upon the price of 4 by 4 Bessemer billets ; the reduc- 
tion proposed being from $25 to $22. 



CAUSES OF THE STRIKE 207 

Second, a change in the date of the operation of the scale 
from June 30th to December 31st. 

Third, a reduction of tonnage rates at those open-hearth 
furnaces and mills where important improvements had been 
made and new machinery added, whereby the output had been 
largely increased. 

As to the justice of the company's demands there is no 
question. The price of all the products of the Homestead mills 
had fallen, during the term of the last agreement, from sixteen 
to thirty-nine per cent. ; and billets had dropped from $27 a 
ton to $22. Under the old agreement there was no decline in 
wages after billets had got below $25 a ton, no matter how low 
prices went ; and the steel company not unreasonably claimed 
that as they were willing to pay proportionate wages when 
prices rose, the men ought to accept reductions to a reasonable 
point when prices declined. So they fixed upon $22 as a mini- 
mum ; and Mr. Frick, at the conference of June 23d, raised this 
to ^23. The men contended for $24, and there the matter 
ended. 

Concerning the second point, the company claimed that as 
contracts for material were generally made at the beginning of 
the year, the price of labor ought to be fixed at the same time. 
This was resisted by the men on the ground that if a contest 
arose between themselves and their employers it was better 
that it should come in summer than in winter. No doubt past 
experience of the horrors of mid-winter strikes justified their 
opposition to the change; but unfortunately for the consistency 
of the men, the steel company was able to point out that in 
some competing establishments the Amalgamated Association 
permitted their scale to expire on December 31st. The com- 
pany's demand was therefore strengthened by precedents. 

As to the third point, which involved the most important 
matter of all, the reasonableness of the Carnegie demand was 
beyond question. The proposed reduction in tonnage rates 
applied to only three departments in the works : namely, the 



20S 



THE HOMESTEAD BATTLE 



32-inch slabbing-mill, the iio-inch plate-mill, and the open- 
hearth furnaces. An illustration will best serve to make clear 
the point at issue. 

When the scale for 1S89 was signed for the 1 19-inch plate- 
mill, it was based on rolling plates direct from ingots, and the 
output was about 2,500 tons a month. But when the ingots 
were first passed through the 32 -inch slabbing-mill — the great 




The 119- inch plate-mill. 



Copyright by S. ?. MrClur.- Co. 



machine that had developed out of Zimmer's little Universal mill 
— and then through the 119-inch plate-mill, the tonnage of the 
latter was more than doubled. With the sweet unreason of the 
toiler, the men who operated the 1 19-inch plate-mill refused to 
share with their employers the cost of running the slabbing- 
mill, and demanded just as much for rolling plates from slabs 
as they had been getting for rolling plates from ingots ; insist- 
ing, moreover, upon receiving all the benefit of the investment 
that had gone into this million-dollar machine. Similarly in 



FIRST ACTS OF VIOLFXCE 209 

the open-hearth department. AVhen the 1889 scale was signed, 
this was 9. comparatively new business; and in three years it 
had been vastly improved. Tonnages had increased ; labor had 
been made easier by the substitution of machines ; but the 
benefits had mainly gone to the workmen. 

Most striking of all, however, is the fact that out of over 
3,800 men employed at Homestead, the wages of only 325 were 
affected by the new scale. Over 3,500 men stood exactly as 
they did before, and were satisfied. During the previous week 
most of them had signed agreements with the company for the 
ensuing three years; and although 3,000 of them belonged in 
no way to the Amalgamated Association, and, indeed, were for 
the most part ineligible for membership in it, they broke their 
contracts and joined the dissatisfied clique that controlled the 
local lodges of the labor-union. It should be said, however, in 
justice to them, that ninety-nine men in a hundred believed the 
Carnegie Company was simply "bluffing" as it had done in 
1889; and even the hundredth man was convinced that "the 
little boss " would never enter into a serious conflict with work- 
men for whom he had expressed such affection. So they hanged 
Chairman Frick and Superintendent Potter in effigy ; and when 
an assistant was sent to remove the figures he was drenched 
with streams of water from hose pipes and jeered out of the 
shops. One man who ventured to express his intention of con- 
tinuing at work was badly beaten, then conducted to the train, 
and banished from the town. 

A few days after the fruitless conference of June 23d the 
eight lodges of the Amalgamated Association at Homestead 
created an Advisory Committee, consisting of five delegates 
from each lodge, with Hugh O'Donnell as chairman. The pur- 
pose of this Advisory Committee was to take charge of the 
strike. Its first active measure was to pass a resolution order- 
ing the mechanics, laborers, and other employees of the mill, who 
had made new contracts with the company, to refuse to work 
until the Amalgamated Association was recognized and its 
14 



2IO THE HOMESTEAD BATTLE 

terms agreed to. It being evident that the order would be 
obeyed, the company gradually closed the several departments 
of the works, until on the ist of July there was not a wheel 
turning nor a furnace burning in the entire plant. 

At the same time the Advisory Committee proceeded to 
organize an army and navy for offensive and defensive opera- 
tions, and a local government to supplant the municipal authori- 
ties. In speaking of these proceedings the chairman of the 
Advisory Committee used the following language : 

"The Committee has, after mature deliberation, decided to 
organize their forces on a truly military basis. The force of 
four thousand men has been divided into three divisions or 
watches, each of these divisions is to devote eight hours of the 
twenty-four to the task of watching the plant. The Command- 
ers of these divisions are to have as assistants eight captains 
composed of one trusted man from each of the eight local 
lodges. These Captains will report to the Division Command- 
ers, who in turn will receive the orders from the Advisory 
Committee. During their hours of duty these Captains will 
have personal charge of the most important posts, i.e., the 
river front, the water gates and pumps, the railway stations, 
and the main gates of the plant. The girdle of pickets will 
file reports to the main headquarters every half hour, and so 
complete and detailed is the plan of campaign that in ten min- 
utes' time the Committee can communicate with the men at any 
given point within a radius of five miles. In addition to all 
this, there will be held in reserve a force of 800 Slavs and 
Hungarians. The brigade of foreigners will be under the com- 
mand of two Hungarians and two interpreters." 

Details of pickets were sent out upon every highway leading 
to Homestead, or towards the steel works, instructed to permit 
no person who could not give a satisfactory account of himself 
to enter Homestead. A steamboat was chartered to patrol the 
Monongahela River with an accompanying fleet of some fifty 
rowboats, located where they would be available for an armed 
body of men on the shortest possible notice. A system of 
signals was adopted, flags being used in daylight, and lights 
and Roman candles at night. A large steam-whistle was pro- 



STRIKERS' MILITARY ORGANIZATION 211 

cured and placed upon the Electric Light Works in the borough 
of Homestead; and a code of signals arranged so that the num- 
ber of blasts from this whistle would be understood to indicate 
the point at which the commanders desired their men to assem- 
ble for battle. 

The efificiency of this organization was quickly put to a test. 
On the very first evening of the lockout intelligence was re- 
ceived at headquarters that two hundred '' black sheep " were 
on their way to the works. In less than two minutes shrill 
blasts from the steam-whistle conveyed the false news to the 
waiting scouts ; and before another ten minutes had elapsed a 
thousand men had been marshalled at the point of the expected 
landing. Such alarms becoming inconveniently frequent, camp- 
fires were lighted along the river- banks and more pickets estab- 
lished; and all night long the stream was patrolled by the 
strikers' steamer Edna, which had been furnished with special 
steam-whistles for signalling. 

On the second day a slight indication of smoke was ob- 
served at one of the chimneys of the works ; and the Advisory 
Committee sent a written notice to the company that the fact 
"caused considerable excitement among our men," and that *' if 
the gas is not turned off we cannot be responsible for any act 
that may be committed." At the same time placards were 
printed and posted in the hotel and places of business in Home- 
stead, saying : 



All Discussion of the Wage Question 
in This Place is Positively Forbidden. 
By order of the 

ADVISORY COMMITTEE. 



In the same arbitrary manner the strikers refused to admit 
men to the works whose presence and attention was necessary 
to prevent deterioration and destruction of machinery. 



212 THE HOMESTEAD BATTLE 

On July 4th the Carnegie Company served a written notice 
upon the sheriff of Allegheny County, calling upon him to pro- 
tect the property, and holding the county responsible for its 
injury or destruction. The next day the sheriff accompanied 
by deputies went to Homestead, and was escorted round the 
works by the Advisory Committee, who pointed out their 
"guards," and asked the sheriff to give them an official status 
by making them his deputies. The astonished official declined 
the request and returned to Pittsburg. The same day he sent 
up a dozen deputies, who were met by the strikers and promptly 
hustled out of town. The Advisory Committee aided their 
departure by conveying them across the river in their steamer 
and putting them in the trolley-cars for Pittsburg. A sheriff's 
proclamation against unlawful acts was torn down and the bill- 
poster escorted out of town. Such were the results of the at- 
tempts of the county officials to safeguard the works. 

The same night two barges, containing some three hundred 
watchmen hired by the Carnegie Steel Company through Pin- 
kerton's Detective Agency and destined for Homestead, were 
towed up the river from a point a few miles below Pittsburg. 
The men were accompanied by a deputy sheriff ; and arrange- 
ments had been made to deputize them, if circumstances arose 
to require it. The barges were fitted up with sleeping bunks 
and cooking arrangements ; and, besides a store of provisions, 
they carried several cases of firearms and ammunition. In 
other respects they were just like any of the other barges used 
on the river. In spite of all precautions to keep the character 
and destination of the boats secret, they were observed by a spy 
of the Advisory Committee as they passed under the Smithfield 
Street bridge, Pittsburg, soon after midnight ; and a warning 
was promptly telegraphed to Hugh O'Donnell. Similar notice 
was sent from Lock No. i, some three miles below Homestead. 
At once the preconcerted signal was given ; and the sleeping 
town was roused by the shrieks of the committee's steam- 
whistle. Men, women, and children tumbled into the streets 



THE ARRIVAL OF THE PINKERTONS 213 

in wild disorder and hurried* towards the river-bank. Many 
openly carried guns, rifles, and revolvers; and others armed 
themselves with staves torn from the garden fences as they ran 
along. 

At the river all was dark and silent. A mist hung over 
the water and dimmed the glare of the electric lamps and 
fires of the Carrie furnaces across the stream. In a little 
while the lights of the barges were sighted; and the strikers' 
steamer Edna gave the alarm by blowing her whistle. Pistols 
were also fired from numerous little boats and by dozens of 
pickets along the bank. Every steam-whistle in town joined 
in the shrill demonstration ; and the slumbering Pinkertons 
turned out of their bunks at the sound and started to break 
open the cases of rifles to defend themselves. Only a dozen 
were at first allowed to have the rifles. Thus the barges, pelted 
by the strikers' bullets, passed the town of Homestead; while 
the shouting crowds ran along the banks, keeping pace with 
them and firing as often as they could reload their arms. One 
bullet passed through the pilot-house of the Little Bill, the tow- 
ing steamer, and others rattled against the sides of the barges. 

When the people on the banks reached the steel works they 
were stopped for a moment by the wooden fence which sur- 
rounded the place ; but a section of this was soon torn down, 
and the crowd swept through the gap, arriving at the pumping 
station in time to see the barges thrust against the shore. 

By this time the dawning light of a new day was breaking 
upon the scene. As the gangplank was shoved ashore from the 
barges, the crowd rushed down the slope to the water's edge 
with loud cries and threatening gestures. One of them, a 
young fellow, who, curiously enough, was a religious leader in 
the community, threw himself flat upon the gangplank, as if 
daring the Pinkertons to march over his prostrate body. Dur- 
ing the struggle to push the fellow aside a shot was fired, fol- 
lowed first by a scattering volley from the crowd, then by the 
return fire of a dozen of Pinkertons. The fusillade lasted for 



214 



THE HOMESTEAD BATTLE 



a couple of minutes, during which most of the crowd on shore 
scrambled up the bank in terror and confusion, and took refuge 
behind the piles of steel in the yards. During this exchange 
of shots two of the strikers were killed and several wounded. 
A number of the Pinkerton men were also injured, one of them 
fatally. 

After the people on shore had retreated behind the piles of 
metal and the Pinkerton men had taken refuge inside the barges, 




The Homestead Battle. 

—From Frank Leslie's Illustrated Weeklv. 



the firing ceased ; and a short conference was held between the 
leaders on shore and the chief of the watchmen. The latter 
explained that he and his men had been sent there to take 
possession of the works to guard them for the company, and 
that they would certainly enter the place, using force if need 
be. The strikers defied the leader of the watchmen, saying 
that before he entered those mills he would " trample over the 
dead bodies of 3,000 honest workingmen. " 



DYNAMITE AND FIRE-RAFTS 215 

A couple of hours later a number of watchmen stepped 
ashore from the barges, and were met by a rattling volley from 
the strikers, who had erected barricades of steel billets and 
beams in the mill yard. The Pinkertons rapidly sought shelter 
in the boats again; and then returned the fire through windows 
and port-holes. 

Soon after nine o'clock the mill workers secured a small 
cannon ; and with this they opened fire from the opposite side 
of the river. During the second skirmish the tugboat Little 
Billy which was the only means of moving the barges, went up 
the river with the dead and wounded ; and when she returned 
an hour or two later to haul away the two barges, she was sub- 
jected to a merciless fusillade. One of her crew was killed and 
several wounded; and the pilot was obliged to lie down to avoid 
being shot, as the boat drifted through the gauntlet of fire and 
so escaped to Pittsburg. Thus, left helpless in their stranded 
barges, the wretched watchmen spent the long sultry day — a 
day in which American workmen seemed inspired with the spirit 
of the French Reign of Terror. There was no horror conceived 
in that barbaric time that had not its counterfeit presentment 
at Homestead. Oil was pumped onto the boats and spread 
upon the river, to burn up the imprisoned Pinkertons. Burn- 
ing rafts were floated down to them. Dynamite was hurled 
upon the barges to break them open that sharpshooters might 
more readily pick off some crouching figure. A car, loaded 
with oil, was set on fire and run down an inclined track towards 
the barges, in the hope that some of the burning stuff would 
reach them. Natural gas was directed from a main near by so 
as to envelop the boats, and rockets were fired into it to explode 
it. The cannon on the opposite bank, soon re-enforced by a 
second one, played upon the barges and their helpless occupants ; 
and riflemen from a hundred points of vantage potted any un- 
wary sufferer who ventured near a window or other opening for a 
gasp of fresh air. But as if to keep the name of the American 
workman from everlasting infamy, every diabolical effort failed. 



2l6 



THE HOMESTEAD BATTLE 



The dynamite exploded harmlessly; the oil-covered waters 
flowed away from the barges ; the burning car stopped short in 
its course; the fire of the cannon was wild, and it was stopped 
after a shot had taken off the head of a striker. But the hor- 
rors that were achieved were enough to give this 6th of July a 
place of its own in the history of Western Pennsylvania. A 
white flag was shown on the barges, and greeted with shouts of 




Shooting at the Pinkerton guards from behind barricades of steel. 

—Fro?n the London Daily Graphic. 



" No quarter," and a volley of bullets. A man was seen to fall 
near the flag ; and the shouts of anger changed to cheers. Every 
eminence about the works, the long trestle and the new station 
in the mill, were black with vociferous crowds. The adjoining 
hills were lined with watchers ; and everywhere the thirst of 
human blood was manifest. No voice was raised in pity; no 
word was spoken for peace. From Pittsburg, and even from 
the Edgar Thomson works at Braddock, armed re-enforcements 
marched to help the strikers, who were already fifteen to one, 
and sheltered by fortifications of solid steel. The wretched 



SAVAGEKV OF THE MOB 217 

watchmen, cooped up in stranded boats, had neither the power 
to advance nor to retreat. 

The events of this dreadful day have been told by Myron R. 
Stowell, an eye-witness, in a little book full of sympathy for the 
workmen. For this reason his story cannot be impugned on 
the ground of prejudice against the strikers. He says : 

" Many a battle has gone down in history where less shoot- 
ing was done and fewer people were killed. There were hun- 
dreds of men, well armed, thirsting for the lives of others in the 
boat, while thousands of men and women stood just out of range 
and cheered them on. Each crack of a rifle made them more 
blood-thirsty and each boom of the cannon more eager for the 
blood of the officers. One of the strikers remarked : 

'There are but two weeks between civilization and barba- 
rism, and I believe it will take only two days of this work to 
make the change.' 

Indeed, it looked as if the veneering of gentility had al- 
ready been cracked. 

Then another shot and another cheer told that somebody 
had been hit. The Pinkertons were too badly scared to make 
any effort to shoot, and were crowded like sheep into the barge 
which lay farthest from shore. Fresh ammunition and arms 
had arrived from Pittsburg for the strikers and the men bent 
harder to their tasks. They worked nearer the river that their 
fire might be more deadly. The workers could be seen drag- 
ging their bodies like snakes along the ground to where they 
could get a better shot. The cannon would again roar, but the 
shot would land in the water above the boat. Once a piece of 
one of the doors fell with the shot. Several of the imported 
officers were revealed, and a score of shots were fired in quick 
succession. Some one must have fallen, for cheer on cheer of 
triumph went up from thousands of throats. At every shot of 
the cannon thereafter a volley of shots was heard from the 
sharpshooters, who had seen some one on the boat. They only 
shot when they saw something, and every crack of a rifle meant 
an attempt on a human life. 

At one o'clock there was a wild commotion at the new sta- 
tion. A tall, brawny workman waved two sticks of dynamite 
high above his head. By his side was a basket full of the 
deadly explosive. The excited gathering, that a moment before 
had been wild, was silent, and listened. His voice was loud 
and distinct. He said : 



21 8 THE HOMESTEAD BATTLE 

'Men of Homestead and Fellow Strikers: Our friends 
have been murdered — our brothers have been shot down before 
our eyes by hired thugs ! The blood of honest workmen has 
been spilled. Yonder in those boats are hundreds of men who 
have murdered our friends and would ravish our homes ! Men 
of Homestead, we must kill them ! Not one must escape alive ! ' 

'Aye, aye, aye!' shouted a half thousand voices. Then 
the Herculean workman continued : 

'The cannon has failed to sink the boats — the oil has failed 
to burn them. Who will follow me t These bombs will do the 
work ! ' 

As he spoke he flourished the dynamite. A score of men 
raised their clubs, and regardless of the fact that they were 
within the range of the Pinkerton rifles, followed him. They 
ran in their haste to take human life. They were not savages, 
but men of families, who, perhaps a few hours before, had held 
infants on their knees or kissed their wives farewell. They 
were good, strong men, wrought up by the sight of blood, and 
ready to take the lives of those who threatened them and theirs. 

With their penknives they scooped up holes for the car- 
tridges and fuse. The latter was very short — it would burn 
quickly. The crowds could see them light the matches and hold 
the messengers of death until they burned closely. Then, with 
strong right arms drawn until every muscle showed like a whip- 
cord, they let fly, and the explosions were cheered by the excited 
men and women. The distance was long, and the bombs had 
to be thrown from behind some shelter, and many of the mis- 
siles fell short of the mark, but when one landed on the roof 
cheer upon cheer went up. One man had crawled down on the 
structural iron, and then, by making a throw of nearly a hun- 
dred feet, struck the boat. The front end heaved and a few 
boards flew. He lighted another fuse and another stick of 
dynamite. It described a semi-circle in the air, leaving a trail 
of smoke behind. It was going to land squarely on top of the 
Monongahela, but instead of striking the roof it splashed into 
a bucket of water. It sizzled for a moment and then went out 
without exploding. It had hardly died, however, when another 
from the pump-house fell on the roof. It lay there smoking a 
moment while the strikers prayed it might wreck the craft. 
There was an explosion, and a hole was torn in the roof. It 
was not then known whether it killed anybody inside, but when 
the boards flew up a gondola hat went flying into the air. 
Another bomb was thrown into the bow of the boat. The clear- 
ing smoke showed a door was gone. Human forms were seen 



SURRILVDEK OF THE WATCHMEN 219 

within, which was a sign for the sharpshooters to do some exe- 
cution. At I :35 o'clock several men went out on the bow of 
the boat to pick up their dead and wounded companions. There 
were a half-dozen shots and two more men fell. Then came 
more curses for the firm and additional cheers of victory. 

Another stick of dynamite fell five minutes later, and in 
three minutes more another tore off a part of the planks. Then 
the men drew closer and their work became more deadly. 

Then it was decided to throw oil again and burn the boat. 
At 12 :io o'clock the hose carriage belonging to the city, and 
half a dozen barrels of lubricating oil were brought to the water 
tanks, together with a fire engine, but there was great difficulty 
in getting it to work. In the meantime a new supply of dyna- 
mite had arrived. The boxes were knocked open and the men 
drew out the explosives as unconcernedly as they would have 
handled their dinners. Then they made another rush for the 
barges and there was more sharp firing. 

About this time a coal steamer's whistle was heard and the 
sharpshooters stampeded to the rear for an instant, thinking 
another corps of deputies had arrived. The alarm was false, 
and they soon resumed operations. Then they got the oil to 
flowing, but, as in the morning, it circled around the boats and 
refused to burn. 

The fight still continued and more attempts were made to 
burn the boats and the three hundred Pinkertons within. It 
was four o'clock when the giant form of President William 
Weihe, of the Amalgamated Association, appeared. Hundreds 
followed him into one of the mills. He tried to address the 
men but they refused to listen to him. President-elect Garland 
was there also, but the cries of 'Burn the boats, kill the Pinker- 
tons, no quarter for the murderers,' drowned his voice." 

Towards five o'clock a fresh attempt at surrender was made 
by the men in the barges. Again a white flag was displayed. 
Fortunately at this moment the leaders of the strikers were con- 
ferring as to what measures should next be taken ; and the Pin- 
kertons' signal suggested a way of ending a desperate situation. 
O'Donnell, chairman of the Advisory Committee, stepped down 
the embankment to receive the message of peace. The spokes- 
man of the imprisoned wretches offered to surrender on condi- 
tion of protection from mob violence. This being agreed to, 
the doors were flung open, and the victorious strikers crowded 



220 THE HOMESTEAD BATTLE 

into the barges. The reporters who followed them found one 
dead and eleven wounded watchmen. The rest were disarmed 
and marched out, while the crowd swarmed over the boats for 
loot. Cases of provisions were broken open and the contents 
distributed among the women and children; bedding and every 
portable thing was taken away. Then the barges were set on 
fire ; and the strikers turned to escort their prisoners to a pub- 
lic hall in town. One by one, with bared heads, the latter de- 



«*«i 




The burning barges, the evening of the surrender. 

scended the gangplank, climbed up the incline to the mill yard, 
and across it to the public road ; and never did captives suffer 
more in running a gauntlet of redskins. For nearly a mile the 
watchmen walked, ran, or crawled through a lane of infuriated 
men, women, and children ; and at every step they were struck 
with fists, clubs, and stones. Their hats, satchels, and coats 
were snatched away from them ; and in many cases they were 
robbed of their watches and money. Not a man escaped injury. 
One of them, Connors, unable to move and defend himself, was 
deliberately shot by one of the strikers and then clubbed. 



CRUELTY TO CAPTIVES 



221 



Another, named Edwards, also wounded and helpless, was 
clubbed by another striker with the butt end of a musket. Both 
of these men died ; and another became insane and committed 




The attack on the surrendered guards. 

—From Leslie's M^eekly. 



suicide as a result of the fearful beating received after surren- 
der. About thirty others were afterwards taken to the hospital 
with broken arms and disjointed ankles, shattered noses, gouged 
eyes, bruised heads, and injured backs. 



222 THE HOMESTEAD BATTLE 

At midnight a special train went to Homestead in charge of 
the sheriff of Allegheny County, and took the Pinkerton men 
to Pittsburg for safety. The day's casualties were ten men 
killed and over sixty wounded. Several died later. 

Flushed with victory the strikers now put the borough of 
Homestead into a state of siege. All strangers were excluded, 
including a party of prominent railway and state officials who 
chanced to be passing through Pittsburg. Many citizens were 
arrested and taken before the strikers' committee, just as in the 
early days of the French revolution. Hotel keepers were noti- 
fied not to lodge or accommodate newspaper reporters whose 
accounts were not favorable to the insurrectionist government. 
Telegraph operators were compelled to exhibit to the self-con- 
stituted authorities private messages that were left for transmis- 
sion over the wires of the public companies, so that it might be 
ascertained if anything detrimental to the dignity or the inter- 
ests of the Advisory Committee was being sent out. Several 
journalists were arrested and held until satisfactory evidence 
could be obtained as to their identity; and all reporters were 
required to have credentials and passports from the Advisory 
Committee, and to wear a conspicuous badge of the Amalga- 
mated Association to insure their personal safety. Some re- 
porters who had incurred the strikers' ill will by publishing 
reports unfavorable to the workmen were arrested, and com- 
pelled, hatless and coatless, to leave the town at midnight afoot, 
the privilege of securing even a private conveyance being denied 
them. And while these conditions obtained, a delegation of 
strikers was at Harrisburg, assuring the governor of Pennsyl- 
vania that perfect peace and tranquillity prevailed in the bor- 
ough of Homestead ; that the civil authorities were respected 
and obeyed; and that the sheriff's call for troops should be 
disregarded. 

It chanced, however, that the governor's own representative, 
sent to Homestead for the purpose of reporting on the condi- 
tion of affairs, was arrested by the strikers and roughly escorted 



ARRIVAL OF THE NATIONAL GUARD 223 

out of town. He returned, and again he was hustled away. 
This happened three times. ^ Such a practical illustration of 
the negation of the rights of citizens sufficed to convince the 
governor of the need for state troops; and on July loth he 
issued an order to Major-Gencral Snowden to call out the en- 
tire division of the National Guard, numbering some 8,000 men, 
and mass them at Homestead to aid the sheriff of Allegheny 
County. Two days later the troops arrived ; the open reign of 
terror at Homestead came to an end ; and the Carnegie officials 
were put in possession of their property. 




CHAPTER XV 

ATTEMPTED ASSASSINATION OF MR. FRICK 

BEFORE the country had recovered from the 
thrill of horror which succeeded the Home- 
stead battle, an attempt was made to murder 
Mr. Frick ; and the bloody details of the 
assault were cabled to the ends of the earth, 
bringing fresh disgrace upon the unhappy town 
of Homestead. On Saturday, July 23d, a Russian 
anarchist shot and stabbed Mr. Frick while he was 
seated in conversation with his associate, Mr. Leishman. This 
man had made several previous visits to the Carnegie offices, 
where he represented himself as the agent of a New York em- 
ployment bureau. Once he had a brief interview with Mr. 
Frick, who told him he thought there would be no need for the 
services of any agency, as the managers were making arrange- 
ments by which they hoped to get their old employees back. 

On the day mentioned this man called again and sent in his 
card to Mr. Frick, who had just returned from lunch and had 
dropped into a chair at the end of the flat-topped desk at which 
he usually worked. It was not his usual seat ; and he had 
moved into it to be nearer Mr. Leishman, who sat diagonally 
opposite. Mr. Frick had swung round in his chair so that his 
side was turned to the door through which the boy brought the 
card. Before the boy could regain the front office with Mr. 
Frick's message, the man stepped through the swinging door 
and glanced quickly around. Mr. Frick looked up in surprise 
at the sudden entry of a stranger, and saw the man make a 
quick movement towards his hip pocket. Realizing the mean- 
ing of the movement, Mr. Frick sprang to his feet. At the 

224 



A DESPERATE STRUGGLE 225 

same moment the fellow had drawn and fired a revolver with 
lightning rapidity, and the bullet, after passing through the 
lobe of the left ear, struck Mr. Frick in the neck. The shock 
sent him to the floor; and as he lay on the carpet the assassin 
fired a second time, and again the bullet struck Mr. Frick in 
the neck. 

While this was happening Mr. Leishman had jumped from 
his seat and was running round the long desk to get at the fel- 
low. He reached him just as he fired a third time, and either 
seized or knocked up his hand, so that the shot went wild, the 
bullet striking the wall near the ceiling. Mr. Leishman cour- 
ageously grappled with the fellow, and while he was wrestling 
with him for the revolver, Mr. Frick struggled to his feet and 
grasped his assailant from behind. In this way the three men 
swayed violently to and fro for a few thrilling moments, and 
then all three fell with a crash against the low wall just under 
the window overlooking Fifth Avenue, the Russian underneath. 
A crowd, attracted by the shots, stood on the opposite side of 
the street ; and seeing Mr. Frick struggling near the win- 
dow, thought he was trying to raise it to give an alarm, or to 
escape from some enemy invisible from the sidewalk. This 
occasioned one of the many erroneous reports sent out to the 
newspapers. 

The fall had loosened Mr. Frick 's grasp of the fellow's left 
arm ; and while Mr. Leishman still held on to the right hand and 
the revolver, the Russian drew a dagger made from an old file 
and plunged it again and again into Mr. Frick, who, bending 
over him and weak from his exertions and wounds, was unable to 
avoid the blows.' First the dagger was thrust into his hip, just 
behind the head of the femur; then it struck him in the right 
side and glanced along one of the ribs; and a third blow tore 
open the left leg just below the knee. Despite his terrible in- 
juries Mr. Frick again threw himself on the ruffian, and finally 
pinioned his arm to the floor. Then the clerks, who had watched 
the struggle from the door as if spellbound, rushed in and 
15 



226 ATTEMPT ON MR. FRICK 

secured the anarchist. The revolver and dagger were torn from 
his grasp and he was dragged to his feet. Covered with the 
blood that had flowed from Mr. Frick's wounds, he was a sorry 
looking object; and Mr. Leishman looked almost as bad. The 
latter, who had so bravely seized the smoking revolver a few 
moments before, and heard the trigger snap even a fourth time, 
now collapsed utterly, and had to be carried from the room. 
Mr. Frick, the only calm person present, leaned against the 
desk and watched the last ineffectual struggles of the wretch 
who had tried to kill him. 

Thrown at last into a chair and held there, the Russian ap- 
peared to be mumbling something, and all but Mr. Frick were 
too excited to notice it. At this moment a deputy sheriff 
rushed in with a drawn revolver and made as if he would shoot 
the man. Mr. Frick interposed. " No, don't kill him," he 
said; " raise his head and let me see his face." As they did so 
it was seen that the man's apparent mumbling was caused by 
his chewing something ; and on his mouth being forced open, 
a cap containing fulminite of mercury, such as anarchists had 
previously used to commit suicide, was found between the des- 
perate fellow's teeth. Even when overcome by numbers, he 
still sought to carry out his devilish purpose by an explosion 
which would involve Mr. Frick and a dozen innocent men in 
his own destruction. 

By this time the office was filled with an excited crowd. A 
German carpenter, who had been at work in the building, broke 
through the throng and aimed a blow at the Russian's head 
with his hammer. It missed him. Then arose cries of " Shoot 
him ! " " Lynch him ! " and amid all the excitement no one 
seemed to give a thought to Mr. Frick, who still stood leaning 
against the desk, with the blood streaming from his many 
wounds. A number of policemen who had been attracted by 
the noise quickly surrounded the assassin to protect him, and 
led him from the room. Then the others turned to Mr. Frick. 
A score of hands hastened to his support ; and he was gently 



MAGNIFICENT COURAGE 227 

placed on a lounge in an inner room, while hurried calls were 
sent for physicians. 

While the blood-sodden clothes were being removed, and 
before the physicians arrived, Mr. Frick talked calmly about the 
assault, and commented with a smile on the assassin's amazing 
muscular power ; nor did his courage fail him when the sur- 
geons began probing for the bullets. At first the doctors said 
there was little hope of recovery. The first bullet had entered 
the side of the neck, cutting the lobe of the ear, and had ranged 
backwards and downwards until it almost reached the shoulder. 
The second bullet had followed a similar course, but from right 
to left. 

While the doctor was probing in the wounds Mr. Frick 
calmly directed him as to the place where the bullet would be 
found, and then as the instrument reached it, he remarked : 
"There! that feels like it, doctor." And while the probing, 
cutting, and sewing up of the wounds were going on, he dictated 
a cablegram to Mr. Carnegie, telling him that he was not 
mortally injured, and he signed several letters which he had 
previously dictated. He also completed the arrangements 
which he had begun earlier in the day for a loan; and signed 
all the necessary papers. The doctors said that it was the 
most magnificent exhibition of courage they had ever seen. 

Most touching of all, and even more characteristic of the 
man, was his manner of greeting Mrs. Frick on his arrival 
home a few hours later in the ambulance. Mrs. Frick had been 
critically ill ; and the excitement of the Homestead battle had 
rendered her condition precarious. Mr. Frick's first thought 
after the attack- was of his wife; and he gave very emphatic 
orders that no alarming reports be permitted to reach her. 
Then he sent two of her relatives who had hastened to the 
office on hearing of the assault, to break the news to her gently, 
and to let her understand that his injuries were trifling. So 
well did they succeed that, as Mr. Frick was carried past her 
bedroom door, she was in no way alarmed. Telling the stretcher 



228 ATTEMPT ON MR. FRICK 

bearers to turn his head around so that he could speak to his 
wife, Mr. Frick addressed her by name, and called out a cheery 
inquiry after the youngest child. Then he assured her that he 
was not seriously hurt and would be in to see her before very 
long. 

The fanatic who made this ferocious attempt on Mr. Prick's 
life had nothing to do with the strikers. He was of the usual 
type of European anarchist ; and he had been only a few years 
in the country. He went from New York to Pittsburg specially 
to kill Mr. Frick. When asked why he selected Mr. Frick in 
particular, he exclaimed in astonishment: ''Why, what would 
the company do without Mr. Frick } Carnegie is thousands of 
miles away, and he would not dare to oppose the men as Frick 
has done." So here again was an echo of Carnegie idealism. 
As for the undiscriminating criminal himself, he was sentenced 
to twenty-one years in the penitentiary for the assault, and one 
year in the workhouse for carrying concealed weapons. 

The news of the attempted assassination created intense ex- 
citement at Homestead, where it was bulletined a few minutes 
after the occurrence. Crowds gathered at every street corner 
and in front of the telegraph stations and newspaper offices ; 
and whenever a man received a message hundreds crowded 
around him to hear the latest news. The strikers heard of the 
attempt with mixed feelings. The more ignorant workmen 
rejoiced openly. " Frick's dead by this time and we've won 
the strike," shouted one. " The Carnegie Company don't amount 
to shucks without Frick," commented another, as he joyfully 
predicted the early collapse of the firm's resistance. But at the 
headquarters of the labor-union the news was received with dis- 
may. While the leaders believed the strikers blameless of this 
particular horror, there already had been so much to set the 
public against them that they feared the discredit of this fresh 
act of violence would fall on them. And their alarm was jus- 
tified. From one end of the country to the other, and across 
the oceans from distant lands, swept a wave of fierce indigna- 



THE ROGUE'S MARCH 229 

tion against the strikers and denunciation of their methods. 
Innocent of this particular crime, the strikers had to bear the 
disgrace of it. 

On Mr. Frick himself the incident seemed to have no effect 
except for the pain and inconvenience it occasioned. His sorely 
wounded body suffered ; but while nurses and attendants were 
prostrate under the intense heat of July, the patient made no 
complaint. From the first day he insisted on being kept in- 
formed of the progress of events. Newspapers, letters, and 
telegrams were read to him ; and he dictated answers to many 
of the latter. His grasp on the strike situation was never 
relaxed for a moment. No move was made by the men that was 
not instantly telephoned to him; and nothing was done by the 
managers that did not emanate from him, or that was not previ- 
ously submitted for his approval. Except that the contest was 
now conducted from Mr. Frick's Homewood residence instead 
of from his Fifth Avenue office, no difference was to be seen in 
the situation. 

By this time the scene of disorder near Pittsburg had be- 
come the centre of interest for the whole world. No other war 
was being fought; no other event of universal interest was 
taking place ; and the attention of the people of every land was 
focussed on the beautiful spot on the Monongahela which John 
McClure had so infelicitously named Amity Homestead. In 
every country columns were daily printed describing the hap- 
penings at the works and the military camp ; and imaginary 
scenes at the bedside of Mr. Frick found their way into news- 
papers printed in many languages. 

As if to keep this interest from flagging, a young soldier 
in the camp called for three cheers for Frick's assassin. His 
outraged commander immediately had him triced by the thumbs 
to a tent-pole and then drummed him, with his head half shaved, 
out of camp to the tune of the Rogue's March. The fellow had 
swallowed some tobacco juice while undergoing his punishment, 
and this had made him sick. So the sensation-loving journals 



230 ATTEMPT ON MR. FRICK 

exploited the incident as a brutal punishment ; and this ran 
round the world as a valuable item of news. 

There was one spot, however, where these items of news 
did not readily penetrate; and that was Rannoch Lodge, on 
beautiful Loch Rannoch. Here, thirty-five miles from the 
nearest railway and telegraph station, Andrew Carnegie, in ac- 
cordance with plans previously made, denied himself to report- 
ers and refused to answer telegrams or letters relating in any 
way to Homestead. Having delegated his authority to Mr. 
Frick, he knew that the measures they had jointly planned 
would be carried out to the letter, despite the efforts of anarch- 
ists or the protests of politicians of a less ruddy hue. And so 
he went fishing ; and the London papers sought in vain to get 
an expression of opinion from him either on the Homestead 
battle or the attempt on Mr. Prick's life. 

In the account of the Homestead strike which Mr. W. T. 
Stead published in 1900, after, as he claims, "talking on the 
subject with Mr. Carnegie this autumn," he repeats the story 
that the labor leaders " had applied to Mr. Frick for Mr. Car- 
negie's address in order to telegraph him — Mr. Carnegie being 
at that time absent in Scotland, and his address not being 
known to any one in this country except his business associates. 
Mr. Frick refused to give the address; whereupon Mr. Reid 
obtained it from our Consul-General in London, John C. 
New, and then cabled Mr. Carnegie, in which he accepted 
the terms proposed by Mr. O'Donnell, and urged that Mr. 
Frick be seen immediately with a view to effecting the settle- 
ment." 

This statement is so incoherent that it is not clear who 
" accepted the terms proposed by Mr. O'Donnell. " The idea 
sought to be conveyed is that it was Mr. Carnegie who ac- 
cepted the terms of the strikers, since no one else mentioned in 
this strange narrative had anything to accept. To make this 
matter clear once for all Mr. Carnegie's cablegrams are here 
given as received in Pittsburg : 



CARNEGIE'S CABLEGRAMS 231 

Rannoch, July 28, 1892. 
We have telegram from Tribune Reid through high official 
London Amalgamated Association reference Homestead Steel 
Works. The proposition is worthy of consideration. Replied 
"nothing can be done. Send H. C. Frick document. " You 
must decide without delay. Amalgamated Association evidently 
distressed. 

The next day this was modified by the following: 

Rannoch, July 29, 1892. 
After due consideration we have concluded Tribune too old. 
Probably the proposition is not worthy of consideration. Use- 
ful showing distress of Amalgamated Association. Use your 
own discretion about terms and starting. George Lauder, 
Henry Phipps Jr., Andrew Carnegie solid. H. C. Frick forever ! 

And in his answer to Mr. Whitelaw Reid, Mr. Carnegie 
cabled that no compromise would be considered by him, and 
that he would rather see grass growing over the Homestead 
works than advise Mr. Frick to yield to the strikers. 

The rest of the story quoted by Stead is fairly accurate. 
" Mr. Frick was obdurate. He refused to consider the matter 
at all, denounced the strikers as assassins, and declared that if 
Carnegie came in person, in company with President Harrison 
and the entire Cabinet, he would not settle the strike. " 

In regard to Stead's complaint that Mr. Carnegie's address 
in Scotland was not given to the strikers, he should have known, 
after he had *' talked on the subject with Mr. Carnegie this 
autumn," that the latter had selected such an out-of-the-way 
residence as Rannoch Lodge for the very purpose of eluding 
the appeals of the workmen which it was foreseen his speeches 
and writings would call forth. And his silence during all the 
exciting happenings at Homestead was in accordance with plans 
made long before. 

Mr. Carnegie's consistency at this time provoked much com- 
ment. Two days after the assault on Mr. Frick, the St. James' 
Gazette reported that " Mr. Carnegie has preserved the same 



232 ATTEMPT ON MR. FRICK 

moody silence towards all the members of the American Lega- 
tion here ; and all other persons in London with whom he is 
usually in communication have not heard a word from him since 
the beginning of the troubles at Homestead." The publica- 
tion went on to say that " the news of the shooting of Mr. Frick 
has intensified the feeling of all classes against Mr. Carnegie. 
A large meeting of the labor representative leagues was held in 
this city yesterday, at which a resolution was adopted strongly 
condemning the course of Mr. Carnegie in regard to the Home- 
stead troubles. The resolution added that should Mr. Carnegie 
insult British workmen by further philanthropic efforts in their 
behalf, it was hoped that they would show their detestation of 
him by contemptuously refusing to accept any offers of help 
from him." 

Now became prominent the contrast between Mr. Carnegie's 
idealistic utterances and the doings at Homestead. News- 
papers in every country and of every political color drew atten- 
tion to the startling discrepancy ; and not a few of them saw in 
the violence of the strikers the logical outcome of the Carne- 
gie commandment : " Thou shalt not take thy neighbor's job." 
The host of critics, that arose with angry clamor, discovered 
in Mr. Carnegie's practical philanthropy but the expression of 
an unmitigated egotism ; and many brutal and insensate taunts 
were flung at him as he lay silent and self-contained in his 
Highland shooting-lodge. It was altogether a pitiful exhibi- 
tion. Even the London Times could not forego the chance to 
fling a sneer. Commenting on the assault on Mr. Frick, the 
writer concludes his editorial thus : 

" Mr. Carnegie's position is singular. The avowed cham- 
pion of trades-unions now finds himself in almost ruinous con- 
flict with the representatives of his own views. He has prob- 
ably by this time seen cause to modify his praise of unionism 
and the sweet reasonableness of its leaders. Or, are we to as- 
sume that this doctrine is true in Glasgow but not in the United 
States, or that it ceases to be applicable the moment Mr. Car- 
negie's interests are touched.-* " 



OUTBURST OF PUBLIC ANGER 233 

A day or two later the representative of the Associated 
Press reported that he had driven from Kingussie to Rannoch 
Lodge, "and made repeated efforts to obtain an interview with 
Mr. Carnegie in order to obtain a statement from him of his 
views regarding the troubles at Homestead, Pa., and more espe- 
cially concerning the shooting of H. C. P'rick, " but "his mis- 
sion then proved fruitless. This morning, however, he was 
more successful," and Mr. Carnegie, "after persistent inter- 
rogation by the caller, finally said, 'Well, I authorize you to 
make the following statement : I have not attended to business 
for the past three years, but I have implicit confidence in those 
who are managing the mills. Further than that I have nothing 
to say.' " 

The storm raised by the publication of this short interview 
proved how wise Mr. Carnegie had been in previously saying 
nothing. The tide of sympathy, which had swept from the 
strikers, now returned to them ; and municipal bodies, work- 
men's unions, political clubs, vied with preachers, lecturers, and 
editors in England and America in fierce denunciation of one 
whose acts, it was said, " conform so little to his verbal utter- 
ances." Some of these expressions of contempt and hatred were 
puerile and stupid in their violence. " Count no man happy 
until he is dead," wrote the St. Louis Post-Dispatch. "Three 
months ago Andrew Carnegie was a man to be envied. To-day 
he is an object of mingled pity and contempt. In the estima- 
tion of nine-tenths of the thinking people on both sides of the 
ocean he has not only given the lie to all his antecedents, but 
confessed himself a moral coward. One would naturally sup- 
pose that if he had a grain of consistency, not to say decency, 
in his composition, he would favor rather than oppose the or- 
ganization of trades-unions among his own working people at 
Homestead. One would naturally suppose that if he had a grain 
of manhood, not to say courage, in his composition, he would 
at least have been willing to face the consequences of his incon- 
sistency. But what does Carnegie do } Runs off to Scotland 



234 ATTEMPT ON MR. FRICK 

out of harm's way to await the issue of the battle he was too 
pusillanimous to share. A single word from him might have 
saved the bloodshed — but the word was never spoken. Nor has 
he, from that bloody day until this, said anything except that 
he 'had implicit confidence in the managers of the mills.' The 
correspondent who finally obtained this valuable information, 
expresses the opinion that 'Mr. Carnegie has no intention of 
returning to America at present.' He might have added that 
America can well spare Mr. Carnegie. Ten thousand ' Carnegie 
Public Libraries ' would not compensate the country for the 

direct and indirect evils re- 
sulting from the Homestead 
--^ ' ' lockout. Say what you will 
."IJ: of Frick, he is a brave man. 

Say what you will of Car- 
- - negie, he is a coward. And 

- — - gods and men hate cowards." 

^ In spite of the outward 

show of indifference with which 
^^:;.r _ Mr. Carnegie received these vicious 

attacks, his sensitive soul suffered 
keenly. He afterwards told a repre- 
"Fishing from morning to sentativc of the Associated Press that 
^^^ ^' "the deplorable events at Homestead 

had burst upon him like a thunderbolt from a clear sky. They 
had such a depressing effect upon him that he had to lay his 
book aside and resort to the lochs and moors, fishing from morn- 
ing to night." 

Meanwhile Mr. Frick, propped up in bed, and swathed in 
bandages, daily received the reports of the managers of the dif- 
ferent works, dictated replies to letters and telegrams, and 
allowed neither bodily pain nor a domestic bereavement to 
slacken his grasp of the situation. On Friday, August 5th, 
thirteen days after the attempt on his life, he astonished his 
business associates by suddenly walking into the office as if 




MR. PRICK'S RETURN 235 

nothing had happened. He left his home unattended, entered 
a street car, and without fuss or ceremony returned to the office 
and took his seat at his desk. It was characteristic of the 
man's simplicity. The previous day he had attended the funeral 
of his youngest child, born in the midst of this excitement and 
dead because of it. The mother's life was almost involved in 
the sacrifice. 




CHAPTER XVI 

THE AFTERMATH OF WAR 

* UNDER the protection of the state 

vJ'^^^ ^^ militia, workmen willing to accept 

I lA- Jl- ^ ^^^ wages which the strikers re- 

^"'^f'^Y'^^^y X^ fused were at once introduced into 
^ the deserted mills. Major-General 

Snowden, who was in command of 
the troops, took a firm hold of the 
situation the moment he arrived; and open 
defiance of law and order ceased at the sound 
of the first bugle-call. The impression had 
gone abroad among the strikers that the 
militia had come to prevent the landing of more Pinkertons. 
The illusion was dispelled in a single sentence of the com- 
mander: "The gates are open. Any one may go in if the 
company permits it." In three days a hundred men were at 
work; in two weeks nearly a thousand were inside the mill, and 
one of the regiments had left for home. 

With the fatuity that had characterized the actions of the 
Amalgamated Association from the outset, a sympathetic strike 
was now ordered in the other Carnegie works. Although the 
scale had been signed at the Upper and Lower Union Mills and 
at Beaver Falls, the men at these establishments broke their 
agreement on July 14th, and left the mills in a body. Super- 
intendent Dillon had both the Pittsburg mills running full with 
non-union labor within four weeks ; and the unprofitable enter- 
prise at Beaver Falls was allowed to remain idle for several 
months. Thus the Amalgamated Association unnecessarily 

236 



A.V INDUSTRIAL STORM-CENTRE 



237 



lost three more mills at a time when it was fighting for its very 
existence. 

The newspaper files of that period show that the industrial 
storm-centre at Homestead still held the attention of the world. 
At Little Rock, on July i6th, Carnegie was burnt in effigy. 
The same day the London EcJiOy once owned by Andrew Car- 
negie, demanded explanations of him as to the report that he 
had *' fortified his works with barbed and electrically charged 




Military camp overlooking the Homestead Works. 



wire." The London Financial Observer of the same date 
preached a sermon on the text of Nero fiddling while Rome was 
burning. 

*' Here we have this Scotch- Yankee plutocrat meandering 
through Scotland in a four-in-hand, opening public libraries 
and receiving the freedom of cities, while the wretched Belgian 
and Italian workmen who sweat themselves in order to supply 
him with the ways and means for his self-glorification are starv- 
ing in Pittsburg." 

Pittsburg newspapers at the same time were gravely discuss- 
ing the advisability of refusing Mr. Carnegie's recent gift of 
money for a library ; and in both chambers of the American 
Congress denunciations of Frick, Carnegie, and Pinkerton were 
freely uttered. The world seemed topsy-turvy ; and the strange 
doctrine that the strikers had a natural right to work in the 



238 THE AFTERMATH OF WAR 

Carnegie mills at wages fixed by themselves was voiced in a 
hundred different forms. In some cases sympathy with the 
strikers took a practical form ; as when the Fairport Fishing 
Company of Ashtabula offered them " 2,000 pounds of fresh or 
salt fish." A day later a Chicago bishop joined the Financial 
Times of London in abusing " Czar Carnegie." 

On the 19th warrants were issued for the arrest of the prin- 
cipal leaders of the riot on a charge of murder ; and the news- 
papers simultaneously reported that Mr. Dillon had 800 men 
at work in the Union Mills. The same day a special commit- 
tee appointed by Congress to investigate the Homestead labor 
troubles held its first meeting ; and work was resumed at the 
open-hearth department and the armor-plate mill. The gov- 
ernor of Pennsylvania also arrived at Homestead. On the 20th 
Keir Hardie, M. P., who had achieved notoriety by his bad man- 
ners and grotesque behavior in Parliament, sent the strikers' 
fund ;£ioo which Andrew Carnegie had previously given him 
towards his election expenses ; and Ben Butler came out in an 
erudite opinion on the possibility of extraditing Carnegie on a 
charge of murder. So laughter followed tears. 

On July 22d the non-union men at Duquesne stopped work 
in sympathy with the Homestead strikers ; but some of them 
regretting their action a few days later, a little riot occurred 
when they tried to get back into the mill. A few soldiers were 
sent over from Homestead ; a dozen warrants were issued for 
the arrest of the ringleaders ; and the trouble ended in a pic- 
turesque man-hunt on the hills and the sending of the mana- 
cled prisoners to Pittsburg. These men were all convicted of 
rioting. 

The last day of this eventful month fell on Sunday. The 
scene in the works was thus described in the papers next 
morning : 

" With for a church the biggest mill in America, boarded by 
a high fence and a protectorate of one hundred and fifty armed 
watchmen, with one thousand soldiers in easy reach, the non- 



STEAD'S GARBLED STORY 



239 



union men in the Homestead plant gave thanks to God this 
morning. About four hundred of the new men had gathered 
in the beam-mill and found seats on rough, improvised benches. 
An orchestra from Pittsburg played 'Nearer, My God, to Thee,' 
and Chaplain Adams of the Sixteenth Regiment, standing where 
the sunshine glistened on his epaulets, preached a sermon that 




The Sheridan cavalry and the Governor's troop going to the rescue of Battery B's 
cannon, which the strikers would not permit to be unloaded from the cars. 

— From Harpers^ Weekly. 

touched many hearts, on a famed biblical character, Saul of 
Tarsus." 

The same paper, under the caption " Everybody Condemned," 
tells of a conference on the Homestead situation of the Central 
Labor Union in 'New York. 

By the 5 th of August fifteen hundred men were at work at 
Homestead ; and on the 8th the strike at Duquesne ended in a 
stampede for work in which more men were hurt than in the 
previous riot. About the same time the members of the con- 
gressional committee of investigation fell out among themselves, 
refused to sign their chairman's report, the minority of two be- 



240 THE AFTERMATH OF WAR 

came the majority, and of the other members each made a report 
for himself. Thus five reports were submitted by the commit- 
tee ; and it is from one of these expressions of individual opin- 
ion that Mr. W. T. Stead quotes a phrase in condemnation of 
Mr. Frick which has since been embodied in Alderson's author- 
ized biography of Andrew Carnegie : 

" The Committee of Investigation of the House of Repre- 
sentatives," says Mr. Stead, " roundly condemned Mr. Frick and 
his officers for lack of patience, indulgence, and solicitude, and 
they say : — 

*Mr. Frick seems to have been too stern, brusque, and 
somewhat autocratic, of which some of the men justly com- 
plain. We are persuaded that, if he had chosen, an agreement 
would have been reached between him and the workmen, and 
all the trouble which followed would thus have been avoided.' " 

This quotation, which, by the way, is garbled by Mr. Stead 
so as to omit a qualifying clause and to include an important 
word (" chosen ") not used in the original, expresses the views 
of a single individual, Mr. Gates, and the other members of 
the committee who had heard the evidence refused to sign it. 
Mr. Stead's conclusion that " Mr. Frick, indeed, seems to have 
been the villain of the piece all through " is also adopted by 
Mr. Carnegie's biographer. In such ways history is made. 

While the confused and contradictory reports of this com- 
mittee of investigation contain little of value, the testimony of 
the witnesses examined by it has much in it that suggests the 
underlying causes of the strike and the violence offered to the 
company's watchmen. As this is a matter of public record it 
need not be repeated here. A single quotation from the testi- 
mony of Mr. T. V. Powderly, General Master Workman of the 
Knights of Labor, will serve as an illuminating example. 

" Does your organization countenance the prevention of non- 
union men taking the place of striking or locked-out men } " 
Mr. Powderly was asked. 



" THY XEIGHBOIVS JOB'' 241 

" We agree with Andrew Carnegie, 'Thou shalt not take thy 
neighbor's job,' " answered tht chief of the Knights of Labor. 

The report of the Senate Committee also made use of a 
quotation from Carnegie's Forum article ending with the same 
terse commandment, to illustrate the course which Mr. Frick 
ought to have followed in his treatment of the workmen ! Under 
all this censure Mr. Frick remained silent, and to this day he 
has never said a word either in explanation or self-defence. 

During all this time the strikers, overawed by the militia, 
had been fairly peaceable. A few assaults on non-union work- 
men were made whenever a small body of the latter was caught 
by night or in an out-of-the-way place ; but the growing hope- 
lessness of their position now made some of the old workers 
desperate. Superintendent Potter was stoned as he sat on his 
porch. The company's steamer was fired on by men concealed 
in a passing train. The house of a "scab" was set on fire; 
and an attempt was made to burn down a big boarding-house 
where non-union men were lodged. Dynamite was used in an 
attempt to injure one of the Union Mills. But these sporadic 
outbreaks had no effect beyond that of alienating the sympathy 
which the press and people of the country had so conspicuously 
bestowed upon the strikers a little while before. A butcher 
was boycotted for supplying the troops with ice; a school was 
deserted because the teachers were the daughters of an Associa- 
tion man who had wearied of the strike and gone back to work. 
The Dorough council was crippled because the unionists would 
not sit with the 4ion-unionists. Through it all the condition of 
the works was slowly improving; and day by day more men 
were found at work. By the third week in September more 
troops had been sent away, and the strike was practically a 
thing of the past. 

Organized labor, however, was slow to acknowledge its de- 
feat. Up to this time the Knights of Labor had contributed 
16 



242 THE AFTERMATH OF WAR 

nothing to the cause of the strikers beyond a voluminous sym- 
pathy and some talk of a general boycott of Carnegie products. 
Now, in the hands of Master Workman Hugh Dempsey of Dis- 
trict Assembly No. 3, it brought to the strikers' aid a weapon 
hitherto happily unknown in American industrial warfare. 
This was poison — a mixture of croton oil and arsenic varied 
with powders of antimony. The hellish plot was carefully in- 
vestigated by a jury presided over by one of the ablest judges 
of Pennsylvania ; and the accused had the benefit of counsel of 
unquestioned force and influence. The verdict of guilty, the 
sentence of the chief criminals to seven years in the peniten- 
tiary, the refusal of the board of pardons a year later to com- 
mute the punishment, may be taken as conclusive proof of the 
existence of this diabolical conspiracy, which brought dishonor 
to organized labor. 

During September and October there was an alarming num- 
ber of dysentery cases among the non-union men who got their 
meals inside the Homestead mills ; but the sickness was at first 
attributed to bad water, careless habits, and the unaccustomed 
hardship of the work around the furnaces. When the disorders 
failed to yield to the usual remedies, the doctors began to sus- 
pect a worse condition; and their suspicions were strengthened 
when the patients improved under treatment for antimony pois- 
oning. Some deaths taking place, the lesser criminals became 
panic-stricken, and hastened to confess that they had been 
bribed by Dempsey and an associate to put yellow powders into 
the soup and coffee served to the workmen. After conviction 
one of these creatures withdrew his confession, acknowledged 
perjury, and the next day recanted again and swore that his 
first evidence was true. It turned out that he had been tempted 
into a fresh conspiracy, which this time had for its purpose the 
pardon of the entire band of poisoners. It is worthy of men- 
tion that the Knights of Labor stood by their fallen official with 
a steadfastness worthy of a nobler cause ; and despite his sen- 
tence to the penitentiary kept him on their rolls. 



INDICTED FOR TREASON 243 

On September 21st true bills were found against one hun- 
dred and sixty-seven participants in the Homestead battle-^ 
three for murder and the rest for aggravated riot and conspiracy. 
The next day Mr. Love joy, secretary of the Carnegie Company, 
was arrested at the behest of the Amalgamated Association on 
a charge of aggravated riot and assault and battery; and Mr. 
Frick and a dozen other officials of the company were included 
in the indictment. 

With the exception of three ringleaders of the rioters, who 
were held on a murder charge, all of these persons were ad- 
mitted to bail. The murder charges duly came to trial. In 
two cases the accused had no difficulty in proving an alibi; and 
the third, that of O'Donnell, resulted in an acquittal. Nine 
months later the cases against the Carnegie officials were 
dropped ; and the same day an order of court was issued releas- 
ing from bail the strikers who were under indictment. Fifty- 
seven men in all had been arrested, of whom thirty-three were 
indicted for treason — the first cases of the kind in the history 
of the commonwealth — twenty-one for rioting, and three for 
murder. 

On October 13th, after ninety-five days' service, the last of 
the soldiers left Homestead ; and their withdrawal was at once 
followed by a recrudescence of violence. At this time the 
situation was as follows : Over two thousand workmen were in 
the mill, among whom were about two hundred of the former 
employees. A number of skilled workmen from Braddock, 
Duquesne, Pittsburg, and other places were among the non- 
union workmen. From day to day additions were being made 
to the forces in the mill, a limited number of them being 
Homestead men. The non-union men lived in and about the 
works. Business men of the borough generally admitted that 
the strike was lost to the Amalgamated Association. On the 
other hand, between two and three thousand idle workmen 
walked the streets, anxious, angry, or despairing; and in hun- 
dreds of homes near by, wives and mothers saw with dread the 



244 THE AFTERMATH OF WAR 

approach of a winter of suffering. Yet, obedient to the cHque 
that ruled the local lodges of the Association, these poor people 
watched strangers coming in, singly and by dozens, to take 
away their only chance of keeping their little home together. 
Here was " the terrible temptation " to violence which Andrew 
Carnegie wrote about in the Forum ; and many of them yielded 
to it. Assaults on the new workmen became more frequent 
than ever; and even murder was done. Every day brought its 
story of outrage. Within two weeks of the withdrawal of the 
militia a new reign of terror had set in; and for their own de- 
fence many of the new workmen were sworn in as deputy sheriffs. 
At the same time a ringing protest against the prevailing out- 
lawry was voiced at a public meeting of the peaceful citizens of 
Homestead, but with little avail. The violence lasted as long 
as the strike had an official existence. One was born of the 
other, lived with and by it, and could not die alone. 

In the mean time many letters and cablegrams were received 
from Mr. Carnegie of the same tenor as those previously quoted. 
A paragraph from one of these, sent early in October, has some 
bearing on Mr. Stead's unfair statement that " the responsibility 
for the industrial war at Homestead lies upon Mr. Frick and 
Mr. Frick alone." It is quoted in the following letter: 

October 12th, 1892. 
My Dear Mr. Carnegie: 

I quote from a personal note received from you as follows : 
" This fight is too much against our Chairman ; partakes of 
personal issue. It is very bad indeed for you — very, and also 
bad for the interests of the firm." ..... 

*' There is another point which troubles me on your account, 
the danger that the public, and hence all our men, get the im- 
pression that it is all Frick. Your influence for good would 
be permanently impaired. You don't deserve a bad name, but 
then one is sometimes wrongly got. Your partners should be 
as much identified with this struggle as you. Think over this 
counsel. It is from a very wise man, as you know, and a true 
friend." 



CARNEGIE'S SOLICITUDE 245 

I am at a little loss to know just why you should express 
yourself so. 1 know it is not from any other than a friendly, 
interest, but, as you should know, it seems to me that I am 
particularly anxious that no action of mine should under any 
circumstances cause loss of any kind to the firm, and that I am 
not naturally inclined to push myself into prominence under 
any circumstances. It seems to me wherever it was possible to 
put any of our people forward I have not let the opportunity go 
by. That is to say, when they have been asked by any one 
whether some arrangement could not be made by which this 
thing could be fixed up they have had instructions to reply, on 
their own responsibility, that we could not under any circum- 
stances agree to a compromise of any kind ; that we held no 
resentments against any of our old men ; that we did not care 
whether they belonged to a union or not, but that we would 
expect, if they wished to re-enter our employment, that they 
would apply as individuals, and if their positions were filled they 
would be offered other ones, provided they had not been guilty 
of violating the law &c. &c., and I think whenever any of our 
people here have had such an opportunity presented to them 
that they have most promptly acted, and thus identified them- 
selves with the struggle. 

I note the counsel you give, but I cannot see wherein I can 
profit by it, or what action could be taken by me that would 
change matters in respect to that which you mention. 

Yours truly, 

H. C. Frick. 
To Andrew Carnegie, Esq., 
care Messrs. J. S. Morgan & Co., 
London, England. 



A wise move was made about this time by Mr. Frick. He 
brought Mr. Charles M. Schwab from the Edgar Thomson 
works, and made him superintendent of Homestead in place of 
Mr. Potter, whom he promoted to the position of consulting 
engineer of all the Carnegie works. Mr. Schwab had graduated 
at Braddock under Captain Jones, and, displaying exceptional 
ability as a manager of men, had quickly won his way from one 
of the lowest positions in the yards to the highest in the office. 
His cheery friendliness made him especially popular among the 



246 



THE AFTERMATH OF WAR 



workmen; and he had many admirers among the strikers at 
Homestead. Tactful and conciliatory, he at once set himself 
to win back the heads of departments and foremen ; and before 
many days had passed had secured the best of them. The 

immediate consequence was 
that better work was done 



^^^ 



/*%--4\. 



'-'^ 




inside the shops, and the 
foremen were soon 
followed into the 
works by their fav- 
orites among the 
strikers. 

Meanwhile, 
around the Union 
Iron Mills and at 
Beaver Falls, some 
thousands of other 
; workmen walked the 

streets in idleness, 
with feelings of anger and 
fear of the future, because 
of their sympathy with the 
men of Homestead. This 
was the aftermath of war. 



"At bonny Ayr. 



During this eventful Octo- 
ber, when the dead leaves were fluttering from the trees at 
Homestead, with dire whisperings of a winter of suffering for 
the strikers and their families, Andrew Carnegie was at bonny 
Ayr, the birthplace of Burns, where another library was being 
dedicated, with dinners, speeches, poems, and processions. A 
local bard on this occasion burst into song: 

" Independent and valiant from childhood to age — 
To pretence meeting scorn, to unrighteousness rage — 
In Carnegie ' the man and the brother ' we see 
Whom, ' for a' that and a' that ' Burns sang with such glee." 



THE REPUBLICAN DEBACLE 



247 



And simultaneously another ^poet, in distant Winona, sang in 
tuneful prophecy : 

" The mills of the gods grind slowly, 

And they grind exceeding fine ; 
And in the ides of November 

You'll find us all in line. 
Our bullets made of paper, 

We'll plunk them in so hot 
That the G. O. P. will wonder 

If they ever were in the plot. 

For we are the people and 

We'll occupy the land 
In spite of the Carnegies' 

Or Pinkerton's brigands." 

In grace of diction, such as it is, the disciple of Burns has 
the advantage ; but for blunt truth-speaking, he of Minnesota 
takes the palm. For the Homestead battle became a national 
issue in the presidential election a month later, and brought 
defeat to the Republican hosts. This was another of the 
sheaves gleaned from the crop sown 
on July 6th. One of the disap- 
pointed leaders — General Grosvenor 
of Ohio — stigmatized Mr. Carnegie 
as "the arch-sneak of this age," 
a judgment which Chauncey Depew 
ungraciously refused to reverse 
when it was submitted to him. " As 
a matter of fact," replied Mr. De- 
pew, " the Homestead strike was 
one of the most important factors 
in the presidential contest, and led 
to a distinct issue in the campaign. 
It happened at a crisis and injured 
us irremediably. . . . The Repub- 
lican leaders attempted early in the 
campaign to have the strike settled and cabled to Mr. Carnegie 
direct without consulting Mr. Frick. Every inducement was 




"I TOO KNOW A GOOD THING!" 

On the wall is a copy of Andrew 
Carnegie's congratulatory tele- 
gram to President Harrison on 
his second nomination : "The pub- 
lic knows a good thing when it 
sees it." 

—From the Chicago Times. 



248 THE AFTERMATH OF WAR 

made to bring Mr. Carnegie into the canvass, but he persistently 
declined to lend his influence or to pay one dollar to the cam- 
paign fund. " 

Another Republican leader was quoted by the New York 
Times as saying : 

" Carnegie four years ago Vvas the best friend the Republican 
party apparently had. His contributions were heavy and spon- 
taneous. The Fifty-first Congress gave him all the protection 
he needed. By this legislation he increased his profits fifty per 



An Anti-Harrison cartoon, with Mr. Frick represented as bringing on his head the 
tribute he never paid. 

cent. The Homestead strike happened at the very worst mo- 
ment for the Republican party. Every argument was used to 
Frick and Carnegie to end it." 

President Harrison naturally expressed himself more cau- 
tiously ; but he nevertheless ascribed his defeat to the discon- 
tent and passion of the workingmen growing out of wages or 
other labor disturbances, which did not permit of that calm 
consideration by these workmen of the effect of the protective 
system upon his wages. His exact words were: 



VIEWS OF POLITICIANS 



249 



"The facts that his [the workman's] wages were the highest 
paid in like callings in the w'orld, and that a maintenance of 
this rate of wages, in the absence of protective duties upon the 
product of his labor, was impossible, were obscured by the pas- 
sion evoked by these contests. " 

It is also certain that the farming vote was adversely affected 
by the broadcast publication of the high wages received by the 
Homestead workmen under a protective regime which left the 




CHARGE OF THE MERCENARIES. 

Mr, Frick is represented in the lead, with Mr. Carnegie following. 

—Frotn the New York World. 



agriculturist on the outside. And so the Democrats rode into 
place on the Pinkerton barges ; and the names of Frick and 
Carnegie became anathema maranatha to all good Republicans. 
It was a most unexpected aftermath. 

For a few weeks longer the stubborn contest continued at 
Homestead, needlessly prolonging the suffering of the men 
and their families and breeding disorder in the township. One 
of the unhappy men was ''goaded to suicide," as the newspapers 



250 



THE AFTERMATH OF WAR 



expressed it. He had had no work since the strike. Before 
that he owned his home and had a well-paid position. His 
wife, " momentarily expecting to become the mother of a second 
child," was in "a most critical condition and may not recover." 
Amid such happenings the public disorder was such as to 
lead to a demand for a return of the troops. Happily this met 
with no response; and on November i8th there was such a 

rush among the strikers for work 
that men were trampled in the 
crowd. Three days later the strike 
was reluctantly called off by the 
local lodges of the Amalgamated 
Association; and the three thous- 
and workmen who had never be- 
longed to the union, and had no 
rights of any kind in it, were per- 
mitted to seek work in the mill on 
any terms they could get. The 
struggle had lasted twenty weeks, 
had cost a score of lives, millions 
of dollars, and, so far as any one could then see, had benefited 
nobody. 

With the perspective afforded by lapse of time, however, it 
can now be seen that this titanic struggle was not in vain. 
Greatly as the suffering attending it must be deplored — suffer- 
ing that ceased not with the official declaration of peace by the 
Association lodges, but stayed throughout the winter with the 
families of many of the strikers — it is nevertheless evident 
that the marvellous prosperity which, a year or two later, fol- 
lowed this struggle was made possible because of it. The 
mental and moral attitude of the workmen towards their em- 
ployers and towards other workmen which found expression in 
the savagery of the attack on the company's watchmen, in the 
use of dynamite, burning oil, and the wounding of defenceless 
prisoners, belonged to a barbaric past, and was wholly incom- 




Unconditional surrender ! 
—From the Chicago Times. 



HALF-WAY DOWN NIAGARA 251 

patible with modern industrialism. The usurpation of the 
functions of government, the summary arrest and punishment of 
inoffensive citizens, and the displays of lawless arrogance by the 
Advisory Committee, implied a misconception of the mutual 
rights and duties of laborers and employers which could only be 
destructive of that harmonious co-operation essential to prog- 
ress ; and thoroughly imbued with false ideas as the workmen 
were, nothing but the most drastic measures would have sufficed 
for their correction. 

One of the most intelligent of the strikers told the Senate 
committee of investigation that when the workmen found them- 
selves " confronted with a gang of loafers and cutthroats from 
all over the country, coming there, as they thought, to take 
their jobs, why, they naturally wanted to go down and defend 
their homes and tJieir property and their lives zvith force, if neces- 
sary, and that is the way the men felt at Homestead." 

Confronted with such a theory of the natural rights of labor, 
the inflexibility of Mr. Frick, so thoughtlessly condemned at 
the time and often since, was the salvation of the workmen 
themselves, as they were afterwards among the first to admit. 
The talk of compromise with such ideas was foolish and inju- 
rious. There are some things that cannot be compromised. 
Insurrection is one of them. It is not possible to jump half- 
way down Niagara. 

In January, 1893, all being quiet on the Monongahela, An- 
drew Carnegie returned from Europe; and on the 30th of that 
month he published a carefully prepared statement of his con- 
nection with the Homestead strike. Summarized, it is as fol- 
lows : 

" I did not come to Pittsburg to rake up, but to bury, the 
past, of which I knew nothing. . . . For 26 years our concerns 
have run with only one labor stoppage at one of our numerous 
works. ... I desire now, once for all, to make one point clear. 
Four years ago I retired from active business; no considera- 



252 



THE AFTERMATH OF WAR 



tion in the world would induce me to return to it. . . . I have 
sold portions of my interests and am gradually selling more to 
such young men in our service as my partners find possessed of 
exceptional ability and desire to interest in the business. I 
am not an officer of the company but only a shareholder. 

To the numerous appeals which I have received urging me 
to give instructions in regard to recent troubles, I have paid no 
attention, but to all these people, and to any others interested 




in the subject, let me say now that I have not power to instruct 
anybody connected with the Carnegie Steel Co. Ltd. The 
officers are elected for a year and no one can interfere with 
them. . . . I do not believe in ruling through the voting power, 
even if I could. , . . When I could not bring my associates in 
business to my views by reason I" have never wished to do so 
by force. As for instructing or compelling them under the law 
to do one thing or another that is simply absurd. I could not 
if I would, and I would not if I could. . . . 

And now one word about Mr. Frick. . . . I am not mis- 



CARNEGIE S EULOGY OF PRICK 



253 



taken in the man, as the future will show. Of his ability, fair- 
ness and pluck no one has now the slightest question. His four 
years' management stamps him as one of the foremost managers 
of the world — I would not exchange him for any manager I know. 

People generally are still to learn of those virtues which 
his partners and friends know well. If his health be spared 
I predict that no man who ever lived in Pittsburg and managed 
business here will be better liked or more admired by his em- 
ployees than my friend and partner Henry Clay P>ick, nor do I 
believe any man will be more valuable for the city. His are 
the qualities that wear; he never disappoints; what he prom- 
ises he more than fulfils. . . . 

I hope after this statement that the public will understand 
that the officials of the Carnegie Steel Company, Limited, with 
Mr. Frick at their head, are not dependent upon me, or upon 
any one in any way for their positions, and that I have neither 
power nor disposition to interfere with them in the manage- 
ment of the business. And further, that I have the most im- 
plicit faith in them." 



r ^>&tTc"A'PITAL' 'uutr PROTECTE.D ■»'■ M^KIhLEY TARIFF ft"P ARMY o' PINKERTONS.|-g?^l <=gi 




lN60AiC,5Cl 

TOEERREBfTOiOLlLfllRS'" 
>^^M5isiaileAmenv eourrrv will pby ali. voub DaMAPE3.isigiViffm^^^ 



A campaign pleasantry. 



CHAPTER XVII 



A RELUCTANT SUPREMACY 




Ore-docks and vessels. 



IT is something more than 
a coincidence that the day 
that marked the beginning 
of the Homestead strike 
saw the birth of the 
Carnegie Steel Company, 
Limited. On July ist, 
1892, for the first time in 
their history, the separate 
establishments whose 
growth we are tracing were brought into a single organization, 
and endowed with one mind, one purpose, one interest. Mr. 
Frick was too wise a general to enter a battle with his 
forces needlessly scattered ; and while fences were > being built 
around the company's works, their corporate strength was also 
concentrated and made instantly responsive to his will. 

The consolidation of the different Carnegie interests had, 
however, long been contemplated by Mr. Frick. As early as 
February, 1890, he had discussed the project with Mr. Abbot, 
chairman of Carnegie, Phipps & Co., and had made it the sub- 
ject of a written communication to Mr. Carnegie. But at that 
time there were obstacles of a financial nature. One concern 
was used to make paper for the other, as the phrase is. That 
is, one Carnegie company selling to another was able to discount 
the notes it received in payment ; so that the transaction had 
all the banking advantages of an outside trade. On occasions, 
too, such notes could be discounted without any antecedent 

254 



A GREAT CONSOLIDATION 255 

sale. In transactions of this kind Mr. Stewart, with his strong 
financial connections, had long^proved very useful. 

Mr. Stewart had died in 1889. His interest had been 
acquired by Mr. Frick, who, adding it to his previous holdings, 
thus became as large a stockholder as Mr. Phipps, and second 
only to Mr. Carnegie. At the same time Mr. Frick became 
chairman of Carnegie Brothers & Co., Limited, as well as a 
director in Carnegie, Phipps & Co. Having previously resumed 
the presidency of the coke company, which he had resigned 
under circumstances already related, Mr. Frick freely used its 
credit to finance the two steel companies and their subsidiary 
interests, and thus made it unnecessary to maintain their organi- 
zations separate. The consolidation of these interests would 
have come in the course of time as a measure of economy ; but 
the combination was hastened by the threat of war with labor. 

The sociologist will be interested in this illustration of the 
unifying effect of war in industrialism. Predatory competi- 
tion, which is a form of warfare, has a similar consolidating 
effect ; and the modern trust is its most conspicuous expression. 
The processes of industrial evolution often take a form that in- 
evitably suggests the thought that even such great leaders as 
Mr. Frick, with their apparent independence and strong govern- 
ing power, are little more than passive instruments through 
which natural forces operate. The changes which an industrial 
organism undergoes in its development are unquestionably 
governed by the same laws as those which^ mould the less com- 
plex forms of life, to which the doctrine of evolution is popu- 
larly limited ; and it often appears that the strong personality 
of the greatest captain of industry can do little more than con- 
trol the direction of this growth. His power is comparable to 
that of the gardener who fastens the young shoots of his peach 
tree to the southern wall, and causes it to spread out in the 
sunshine more than it would if left alone. 

In the consolidation of July ist, 1892, the Carnegie Steel 
Company, Limited, became the owner of the Upper and Lower 



2 56 A RELUCTANT SUPREMACY 

Union Mills, the Lucy Furnaces, the Edgar Thomson Steel 
Works, the mills at Homestead, the newly acquired property at 
Duquesne, the Keystone Bridge Works, the unprofitable and 
prolonged experiment at Beaver Falls, with a few other interests 
in ore and natural gas sprinkled about Western Pennsylvania. 
The capital was ^25,000,000. It was a gigantic concern; but, 
as De Tocqueville says of the United States of his time, it was 
"a giant without bones." It had gristle, however, and this 
soon hardened into bones. 

Having brought the separate establishments into a single 
organization, Mr. Frick now sought to harmonize their relations 
so that each plant would serve to supplement and round out the 
operations of every other. This he effected by the Union Rail- 
way, which he built to connect the principal works with each 
other and with all the different transportation systems entering 
the Pittsburg district. It was a masterly conception; for it 
unified the scattered works and made them as easy to operate as 
if they had been contiguous. At the same time it gave them 
unequalled transportation facilities through direct connection 
with every important railway system in Western Pennsylvania. 

The advantages of easy exchange of products among the 
different works cannot be stated in figures ; but they have their 
place in the phenomenal record of the firm's profits given else- 
where. The saving in switching charges alone paid interest 
on the cost of the railroad ; and the company was allowed twenty- 
five cents a ton rebate on ore rates. 

A further advantage was that the company thus regained 
possession of its own yards. Hitherto the different railroads 
running into the works had control of all tracks and sidings ; 
and so tenaciously did they hold to these cheaply acquired 
rights that they often resisted the extension of a mill that in- 
volved the removal of a track. This cause of annoyance now 
came to an end; and a judicious rearrangement of tracks and 
sidings, so as to meet changed conditions, resulted in a great 
saving of yard space and expedited the handling of vast ton- 




THE EDGAR THOMSON S 




THE HOMESTEAD STE 




THE DUQUESNE STEE 



Plate X. 




fc^ ^ft 



'^'^'i&l^n 



L WORKS, BRADDOCK, PA. 




A^ORKS, MUNHALL, PA. 




ORKS, DUQUESNE. PA. 



THE UNION RAILROAD 257 

nages. The superiority of this §ystcm, by which the traffic was 
regulated by one organization instead of by several railroads, is 
readily seen when a statement is made of the total tonnage 
entering and leaving the works of the Carnegie Steel Company. 
In 1899 this amounted to 16,000,000 tons — as much as the 
combined total freight handled by the Northern Pacific, Union 
Pacific, and Missouri Pacific railways, with their 13,000 miles 
of track, 1,500 locomotives, and 50,000 freight-cars. 

The next step in the progress of this great industrial aggre- 
gate towards completeness was that which gave it possession of 
the iron ore it needed. This was the only thing it had to buy 
of outsiderSo So long as it did not itself produce everything it 
needed, it could not be considered a perfect industrial unit, such 
as it was Mr. Prick's ambition to make it. An accident helped 
him to a realization of his great plans ; though they were nearly 
frustrated through the unexpected opposition of Mr. Carnegie. 

The story of the way the Carnegie Steel Company acquired 
its great ore mines on Lake Superior lacks none of the romance 
that makes the history of Homestead and Duquesne so inter- 
esting. It is the story of a huge profit made with hardly a 
dollar of investment, and the accepting of an impregnable posi- 
tion in the industrial world with a reluctant and complaining 
consent. It is the amplified tale of the " most hazardous enter- 
prise," told afresh; but where a thousand dollars was then in- 
volved, a hundred millions now hold our interest. Unfortu- 
nately it is a story that shatters all preconceptions of the genius 
necessary to achieve millionaireship ; but that is merely inci- 
dental. 

Among the boy companions of Thomas M. Carnegie was 
Henry W. Oliver. He had become one of the cleverest busi- 
ness men of Pittsburg, and had made several fortunes in iron 
and steel manufacture before he reached the maturity of mid- 
life. He was singularly far-sighted and enterprising, and a 
skilful financier. Some time in 1892 be formed a company, 
called after himself, to operate the Missabi Mountain mine on 
17 



258 



A RELUCTANT SUPREMACY 



the Mesaba range; his main object being to provide a cheap 
and uninterrupted supply of high-grade Bessemer ore for his 
own furnaces. 

Mr. Frick, who had similar ideas for his own works, watched 
the experiment with interest ; and presently he suggested to 
Mr. Oliver that an ore combination with the Carnegie Steel 
Company might be made mutually beneficial. Mr. Oliver was 
quick to see the advantage of such a union ; permitting him, as 




Group of miners near Lake Superior. 

it would do, to bargain with independent miners and transporta- 
tion companies on a basis of a high minimum. In other words, 
the enormous consumption of ore of the united plants would 
enable him to offer a guaranteed tonnage to railways and steam- 
boat companies in exchange for low rates, as well as to make 
exceptional offers to mine owners willing to let their ores be 
worked on a royalty basis. He therefore viewed the sug- 
gestion with favor, and, after some negotiations, agreed to Mr. 
Prick's proposal to give the Carnegie Company one-half the 



A DISCREDITED PROPHET 259 

stock of the Oliver Mining Con^any, conditioned on a loan of 
half a million dollars, secured by a mortgage on the ore 
properties, to be spent in development work. In this ingenious 
way Mr. Frick so arranged that the Carnegie ore interest would 
not cost a dollar. 

The matter was at once brought to the attention of Mr. 
Carnegie, who laconically opposed it as follows, in a letter dated 
Rannoch Lodge, Kinloch-Rannoch, Perthshire, August 29th, 
1892 : 

" Oliver's ore bargain is just like him — nothing in it. If 
there is any department of business which offers no inducement, 
it is ore. It never has been very profitable, and the Massaba is 
not the last great deposit that Lake Superior is to reveal." 

Mr. Frick, however, made the combination with Mr. Oliver; 
and, on his return from Europe, Mr. Carnegie expressed him- 
self so vigorously in condemnation of it that there ensued the 
first coldness between himself and Mr. Frick. 

Mr. Carnegie's attitude was not modified by the successful 
working of the arrangement ; and during the next two years he 
repeatedly placed himself on record, with increasing emphasis, 
as being opposed to any venture in Lake Superior ores. Writ- 
ing to the Board of Managers from Buckhurst Park, Withyham, 
Sussex, on April i8th, 1894, he says again: 

'* The Oliver bargain I do not regard as very valuable. 
You will find that this ore venture, like all our other ventures 
in ore, will result in more trouble and less profit than almost 
any branch of our business. If any of our brilliant and talented 
young partners have more time, or attention, than is required 
for their present duties, they will find sources of much greater 
profit right at home. I hope you will make a note of this 
prophecy. " 

Of course the managers made a note of the prophecy; and 
it afterwards furnished subject for many a subdued laugh at 
their meetings. 



26o A RELUCTANT SUPREMACY 

It subsequently transpired, however, that Mr. Carnegie 
thought his company was entitled to a larger share than one- 
half of the Oliver Mining Company's stock ; and, to please him, 
Mr. Oliver consented to sell the Carnegies an additional interest 
of one-third, making their holdings five-sixths of the total 
stock. But he took care to safeguard his own interests by a 
contract under which the Oliver furnaces were entitled to one- 







An open-pit mine. 

sixth of all ore mined by the company. At this time the capi- 
tal of the Oliver Mining Company was ^1,200,000. 

In 1896 Messrs. Oliver and Frick made the celebrated 
Rockefeller connection, by which they leased the other great 
mines on the Mesaba range on a royalty basis of only 25 
cents a ton. This low price was given by the Rockefellers in 
consideration of a guaranteed output of 600,000 tons a year, to 
be shipped over the Rockefeller railroads and steamships on the 
Lakes, with an equal amount from the Oliver mine. This 



A SAVING OF $27,000,000 261 

amounted to 1,200,000 tons a year; and as the contract was to 
run for fifty years, it meant a guarantee of 60,000,000 tons of 
freight, at 80 cents a ton by rail and 65 cents a ton on the lakes 
— a consideration great enough to justify the low royalty of 25 
cents when other mine owners were getting 65 cents. To the 
Carnegie- Oliver iron interests it meant a visible saving of 
$27,000,000. 

This alliance with the Rockefellers had an unexpected re- 
sult. It produced a panic among the other mine owners ; and 
stockholders in Boston, Chicago, Cleveland, and the Northwest 
hastened to get rid of their ore properties at almost any price. 
The demoralization extended to the ore markets ; and Norrie, 
which sold at $6 a ton in 189 1, dropped to $2.65 on the docks 
at Cleveland. 

This was Mr. Oliver's opportunity; and backed by Mr. 
Frick and some of the more enterprising Carnegie managers, 
like Curry, Schwab, Gayley and Clemson, he hastened to secure 
options on all the best mines in the Lake Superior region. The 
following is the argument he submitted to the Carnegie mana- 
gers on July 27th, 1897 : 

New York, N. Y., July 27, 1897. 

H. C. Frick, Chairman, 

Dear Sir : I mail you my specific reports on the Norrie, 
Tilden, and Pioneer mines. 

I now address you mainly to impress my views that it should 
be our policy to acquire all three of these properties. We (I 
mean the Carnegie and Oliver furnaces) have paid more than 
our share of tribute to Cleveland and Northwestern miners. 
Part of their receipts were profit, but a large part was wasted 
in expenses that we will in the future save: in exploration, In 
which we will benefit; in developm.ent of mines that have 
proved failures ; and in excessive freight rates to steamship lines 
controlled by the Cleveland middle-men. All this should stop. 
I claim that we could produce and deliver our ore to Lake Erie 
ports 20 to 30 cents per ton cheaper than it can be done by 
those now in control of the mines we seek. Our saving would 



262 A RELUCTANT SUPREMACY 

be in steady and more regular mining, in avoiding a line of high 
salaried officers, in procuring lower Lake freights, and in sav- 
ing the Cleveland commission of lo cents per ton. I am satis- 
fied that the economies that we will practise in the lines above 
indicated will be fully equivalent, in the future, to any royalties 
we may pay. The Carnegie furnaces and the Oliver furnaces 
will require about four million tons of ore per annum. Our 
minimum, under my proposition, would stand as follows : 

Mesaba i , 200,000 

Norrie 700,000 

Tilden 400,000 

Pioneer 500,000 

Total 2,800,000 Tons 

On the above, the only cash obligation that we will have if 
my plan is carried out, is in the purchase of the Norrie stock. 
The Mesaba leases we can throw up on six months notice, and 
the Tilden and Pioneer leases on three months notice. The 
amount that we would invest in the Norrie is a very small item, 
considering the immense stake we have in the business and the 
fact that if we do not fortify ourselves on the plan that I have 
indicated, it would be easy for the mine owners to exact three 
to four millions of dollars, or even a greater sum, from us, as a 
profit on the ore we consume. A glance at the prices paid for 
ore the past lo or 15 years will show that my estimate of the 
profits that we have paid them is extremely conservative 

Excuse me for bringing to the attention of yourself and 
your associates the fact that the Carnegie Company never here- 
tofore hesitated to invest millions of dollars to save 25c to 50c. 
per ton in the manufacture of pig iron. You destroy old plants 
and erect new ones to save a quarter of a dollar per ton. You 
are now engaged in building a railroad to the Lakes, at an im- 
mense expenditure of treasure and credit, with the ultimate ob- 
ject of making a saving (in which your competitors to a cer- 
tain extent will share) of 25 to 30 cents per ton, and to protect 
Pittsburgh against high ore rates in the future. I propose at a 
risk of using our credit to the extent of ^500,000, or possibly 
one million dollars, to effect a saving, in which our competitors 
will not share, of four to six million dollars per annum. All 
arguments to the contrary notwithstanding, I know I am right 
in these matters; as, in my judgment, with a knowledge of the 
nature of the ownership of the mines in the Northwest, no 
power can prevent their soon coming together and exacting the 
old time prices for ore. 



HENRY W. OLIVER'S FORESIGHT 



263 



On the Gogebic Range, the mines I have selected comprise 
over 80;;^' of developed ore or*** ore insight." They comprise 
in this year's pool about 60% of the allotment, the allotment 
being made not on the basis of ore in sight, but on the basis of 
the preceeding year's shipments. They are the only mines on 
the Range that can mine iron ore at present prices and make 
money. The other mines v^^ith their small product and heavy 
general expenses, are not making one cent per ton. The result 




An ore-tram. 



is that one or two of the smaller of these mines are being 
thrown up this year; and, with proper care and attention, if we 
were on the ground, we should be able to take up practically 
all of them. 

Doubts may -arise as to the quantity of ore in the properties 
we propose to take up. The question is, however, if the ore is 
not in the mines I propose to acquire, where can it be shown to 
exist, in properties available for lease or purchase, in the Ranges 
other than the Mesaba Range .•* I have selected as the proper- 
ties we should acquire the mines that common report names as 
having the largest quantity and our special reports confirm that 
view. If there be not large quantities of ore in the properties 
we have under consideration, then there are no large deposits 



264 



A RELUCTANT SUPREMACY 



of Bessemer ore yet known, outside of the Mesaba Range, and 
the Chapin and Minnesota Iron Go's properties. In that case, 
Bessemer ores will shortly appreciate in value and we, with 
others, will have to pay the holders thereof a large advance on 
present prices. 

An important point, in making the venture in the Gogebic 
region and securing a large body of ore, is the effect it will have 
upon the guarantee made us, by the Rockefeller party, that our 
ore shall be as low as any other Mesaba ore at Lake Superior 
ports. The possession of a large body of ore in the Gogebic 
Range will strengthen our position, in holding the Rockefeller 
people down to low freight rates from the Mesaba Range. 

The three properties I propose to take up contain not only 
the largest body of ore in sight, but are practically the only 
mines excepting a few extra low phosphorus mines and the 
Chapin and Minnesota Iron Co. , properties, that are this year, 
under their system of mining and expenses, producing ores at a 
profit. In addition to this, as showing their standing in the 

trade, they have 
been allotted, on the 
basis of last year's 
shipments, over 50^ 
of the Gogebic out- 
put, and over 25^ 
of the total, in a 
Pool of 4,250,000 
tons, comprising all 
the Bessemer ores 
(including Chapin) 
produced in the 
Northwest, except- 
ing only ores from 
the Mesaba Range. 
I am not ignor- 
ing the strong posi- 
tion we hold on the Mesaba Range. With two exceptions, 
we possess the only steam shovel mines and the low cost of 
this ore is extremely gratifying. More Mesaba ore can be 
used in our mixtures, but it is not a wise policy to quickly ex- 
haust the rich quarry we have on the Mesaba Range, taking 
off rapidly the surface ore. Although we are mining it at 
present for less than five cents per ton for labor, we must 
look to the future, when we will have to go deeper, pump 
water and lift the ore. We should rather prolong the period 




A BUCYRUS SHOVEL AT WORK. 

" Five cents a ton for labor." 



HENRY W. OLIVER 



Plate XI, 



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A STRONG ARGUMENT 265 

of cheap steam shovel mining, take in the other Range prop- 
erties I suggest for mixture;^ and, by working one Range 
against the other, keep down costs of freights. I desire to 
impress upon you the fact, that if it had not been for our 
Rockefeller-Mesaba deal of last year, with the consequent de- 
moralization in the trade caused by the publication thereof, it 
would not have been possible for us to now secure the other 
Range properties I propose to acquire, either by lease or for any 
reasonable price. We simply knocked the price of ore from 
$4.00 down to say $2.50 per ton. Now let us take advantage 
of our action before a season of good times gives the ore 
producers strength and opportunity to get together by com- 
bination. 

I trust that when you read this letter and my reports you 
will not attribute the strong position I take to my usually 
optimistic nature. It is true that I generally like to view the 
bright side of affairs, but these practical matters I have digested 
in a thoroughly judicial spirit, and my conclusions are the result 
of great thought and most thorough investigation. You do not 
hear of the many properties I have condemned and turned down 
as being not worthy of your consideration. I have selected, 
for the decision of my associates, only the very best. The 
Minnesota Iron Company properties are out of the question ; 
the banns have been published and union with the Illinois Steel 
Company is only a matter of time. All others, however, I 
have, in one shape or another had before me. The Chapin is 
too high in phosphorus and held by too stiff a crowd. Other 
Menominee properties — (the Aragon, for instance, that was 
sold the other day), — too small and expensive. I have not 
recommended or tried to lead you into waste of money on ex- 
plorations of virgin property. Mr. A. M. Byers told me that 
he, with Kimberly, had worked for years, spending over a mill- 
ion of dollars, in sinking shafts through solid rock, hunting a 
lost vein of ore, on the Ludington mine, which adjoins the 
Chapin. Please recall that on the Mesaba Range I condemned 
poor properties such as the Sauntry and others ; that I stood 
strongly against tlie Mahoning out of which they have great 
difficulty this year in mining any but non-Bessemer ores, and 
that I only brought before you, for approval, the magnificent 
properties on the Mesaba Range that we are now operating. 
Pardon me for mentioning the above. I only do it to impress 
upon you the fact that I have analyzed this question most thor- 
oughly. I have given months of thought to these questions, 
where others have scarcely given minutes. I know I am right 



266 A RELUCTANT SUPREMACY 

and trust you and your associates will give me opportunity to 
prove it. The future will show that all my predictions will 
come true to the letter. Yours &c 

HENRY W. OLIVER. 

This document was sent by special messenger to Mr. Frick 
in London and by him transmitted to Mr. Carnegie in Scot- 
land. To the surprise and dismay of everybody concerned, Mr. 
Carnegie again opposed the project. From the fastnesses of 
his Highland retreat he again issued a laconic veto, with a quip 
and a chuckle at his partners' enthusiasm. Thereupon Mr. 
Oliver despatched the following cablegram : 

G87CM697 

THE CARNEGIE STEEL COMPANY, LIMITED. 



PRIVATE TELEGRAPH SERVICE. 



Telegram Sent from General Offices; Carnegie Building, Pittsburg, Pa. 

Sent by Received by Time, 

Dated. September 25, 1897. 
To Carnegie Laggan 

I am distressed at indications here that Norrie options ex- 
piring on Monday, are to be refused. It would be a terrible 
mistake. The good times make it that I could not possibly 
secure these options again at fifty per cent., advance. The 
Norrie mine controls the whole situation. They have sold over 
one million tons this year. With the additional property we 
will get from the fee owners, we secure fifteen to twenty million 
tons of the ore that the Carnegie Company are purchasing this 
year five hundred and fifty thousand tons. I will guarantee, 
counting the surplus they have in their treasury, to return in 
profits every dollar we invest in two years. Do not allow my 
hard summer's work to go for naught. 

HENRY W. OLIVER 
chg. O. M. Co. 

It will be seen from this that the Carnegies had just bought 
550,000 tons of this very ore, which was yielding the mine 
owners ^i to ^1.25 a ton profit. By instructions from Scotland 



REFUSAL OF $^00, 000,000 



267 



they had made this purchase just at the critical moment that 
Mr. Oliver was negotiating for options on the shares of the 
Norrie mine; and his task was made doubly difficult by the 
fact. Before this the Norrie owners had sold only 150,000 
tons, as against ten times that amount in previous years. Not- 
withstanding this embarrassing purchase, Mr. Oliver was able 
to secure options from about four hundred stockholders, who 
resided in every part of the country, and, one might say, in 




Piles of iron ore ready for loading. 

every part of the world. This was the " hard summer's work " 
which was rendered futile by a word from Carnegie. 

On receipt of Mr. Oliver's cablegram, however, Mr. Carne- 
gie so far reconsidered his objections as to leave the decision 
to the chairman and Board of Managers in Pittsburg; and these 
gentlemen promptly authorized Mr. Oliver to close the deal. 
This action was the pivotal point in the gathering together, 
by the Carnegie- Oliver interests, of the great ore properties 



268 A RELUCTANT SUPREMACY 

which gave them their impregnable position in the iron indus- 
try of the country. On the organization of the United States 
Steel Company, the Carnegie- Oliver company owned two-thirds 
of the known Northwestern supply of Bessemer ores^ — roughly, 
500,000,000 tons, which Mr. Schwab has since valued at ;^500,- 
000,000. It would be difficult to find a parallel to this inci- 
dent in any romance of American industrialism. 

It is only fair to Mr. Carnegie to add that he afterwards so 
far modified his estimate of Mr. Oliver as to offer him an inter- 
est in the Carnegie Steel Company. 

The great value of the gift which Andrew Carnegie thus 
reluctantly allowed Mr. Frick to accept for the company may 
be further illustrated. The first Mesaba mine secured by Mr. 
Oliver is of such character that 5,800 tons of ore have been 
mined and loaded into cars by one steam shovel in ten hours; 
and the output for one month was 164,000 tons. This was the 
work of only eight men. Three such machines, made by the 
Bucyrus Company of South Milwaukee, mined from its natural 
bed 9 1 5,000 tons of ore during the season of 1900, working day 
shift only. Some of the other great mines are of the same 
character. The method of mining is shown in the accompany- 
ing photographs. Five tons of ore are lifted by the machine 
each stroke; and five full- weight lifts will fill a car. A 2 5 -ton 
car can be filled in two and a half minutes, which is at the rate 
of 600 tons an hour. Andrew Carnegie often says that Fortune 
timidly knocks at every man's door at least once during his 
lifetime. The statement is too modest to fit his own case ; for 
Fortune has repeatedly battered down the barricades with which 
he has tried to exclude her. Nor has she been scared away by 
the inscription above the Carnegie threshold, " Pioneering don't 
pay ! " 

Having thus provided an unfailing supply of the best Besse- 
mer ores at the mere cost of mining them, Mr. Frick at once 
began to elaborate plans for their cheap and certain transporta- 
tion to the furnaces. A contract with the Bessemer Steamship 



THE LAKE RAILROAD 



269 



Company, a Rockefeller concern, ensured the regular delivery 
of 1,200,000 tons a year at Lake Erie ports; and an agree- 
ment was simultaneously made with the Pennsylvania Railroad 
for the land haul of some two hundred miles. But this condi- 
tion of dependence was unsatisfactory ; and Mr. Frick boldly 
talked of building his own railroad to the Lakes. This brought 
an offer from the president of the Pennsylvania Railroad of bet- 
ter facilities; and Mr. Frick proposed an arrangement under 
which the Carnegie Steel Company should run its own ore 
trains from Lake Erie, equipped with its 
own locomotives and crew, over the ^;'Rrf 1 
Pennsylvania tracks. This plan was 
well received by the officials of the 
Pennsylvania Railroad; but before 
anything definite had been 
decided upon, a telegram was 
received from Mr. Carnegie 
in Florida, asking that all 
negotiations be suspended 
until the arrival of his letter. 
When this came it was found 
that he had entered into an 
agreement with Mr. Samuel 
B. Dick, president of the Pittsburg, Shenango and Lake Erie 
Railroad, to reorganize that company, which was on the verge 
of bankruptcy, and to build an extension from its terminus at 
Butler to a point on the Union Railroad at Bessemer. 

This Pittsburg, Shenango and Lake Erie had had an event- 
ful history, involving receiverships, reorganizations, and con- 
solidations; and at this time it had little more than a right of 
way and two streaks of rust, as the saying is. It had certain 
terminal facilities at Conneaut Harbor, however; and during 
the previous year (1895) a quarter of a million tons of ore had 
been handled there. The Government was dredging the harbor, 
and its facilities were capable of some improvement, though not 




Battered down the barricades." 



2/0 



A RELUCTANT SUPREMACY 



to the extent expected when this deal was made. The harbor 
has frequently been inconveniently crowded. 

On July 25th, 1896, the first contract was let for the exten- 
sion to Pittsburg; and simultaneously the work of renewing 
the old track was begun. One-hundred-pound rails were laid 
down, grades lowered, wooden trestles replaced with steel, and 
in other ways the road was so changed as practically to make it 





















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Ore vessels in Conneaut Harbor. 

a new one. A maximum south-bound grade of thirty-one feet 
per mile was secured over the entire route, an achievement of 
no small difficulty in the hilly parts of Western Pennsylvania. 
A steel bridge across the Allegheny two-thirds of a mile long 
was the most noteworthy engineering feature of this road; 
and the whole work of renewal and the building of forty-two 
miles of new track occupied only fifteen months. By October 
4th, 1897, ore trains consisting of thirty-five steel cars, each 
carrying 100,000 pounds, were running from the company's own 



SOME IMPRESSIVE RECORDS 271 

docks on Lake Erie over the company's own line to Bessemer, 
and there distributed over the company's Union Railroad to the, 
blast-furnaces at Braddock, Duquesne, and Pittsburg. It was 
a long step in the progress towards self-sufficiency at which Mr. 
Frick had long been aiming ; and it had cost nothing beyond an 
issue of bonds, which the volume of traffic furnished by the 
Carnegie Steel Company itself made gilt-edged. 

The results of the operation of this road, now known as the 
Pittsburg, Bessemer and Lake Erie, and its docking facilities 
at Conneaut, as set forth by Mr. J. T. Odell, its former vice- 
president, are as follows : 

" The lowest rate per ton per mile, the highest average 
length of revenue haul in proportion to its track mileage, the 
greatest density of tonnage in proportion to its freight-train 
mileage, the greatest average paying load, and the lowest 'ton- 
mile cost ' of any road on the American continent reporting to 
the Interstate Commerce Commission. The average paying load 
of all its freight trains, including three branches, and with but 
little back loading, was, for the year ending December 31, 
1899, yjy tons. It is confidently expected, when the south and 
north bound tonnage is 70 per cent, and 30 per cent, respect- 
ively, and the tonnage reaches 5,000,000 tons annually, as it 
promises, that the average paying load will be not less than 
900 tons, or four and one-half times greater than the present 
average paying load of the country. The maximum weight of 
the paying load for the year was 1,580 net tons, with the aver- 
age, as before stated, of yy/ tons. Of the ore trains, each 
earned on a 3)^ -mill rate per ton per mile (gross ton) ^5.13 
per train mile. The road is laid with 100-pound rail and the 
track ballasted with furnace slag. The bridges will carry 6,600 
pounds to the lineal foot. The standard locomotive is the con- 
solidation pattern, having cylinders 22 by 28 inches and weigh- 
ing 170,000 pounds on the drivers alone. The ore equipment 
consists mostly of steel cars, weighing 17 tons and carrying 
50 tons of ore. The company is having built a few of what 
will prove to be the heaviest locomotives in the world, having 
cylinders 23 by 32 inches and weighing 217,000 pounds on the 
drivers. With these locomotives the total weight of an ore 
train, including the locomotive and light weight of the cars, 
will be about 2,600 tons. 



2/2 



A RELUCTANT SUPREMACY 



" But it is not only in the operation of the road that great- 
est economy is obtained, but also in the transfer of the ore 
from the lake steamers to the trains. The steel company owns 
the entire harbor at Conneaut. Nine ships can be docked at 
the same time. Twenty-five thousand tons of all classes of 
freight can be handled every ten hours. The most modern ma- 
chinery is used for handling ore and coal. A 6,000- ton ship 
can be cleared in fourteen hours, and in the same time from the 
moment the hatches are opened the ore can be at the furnaces 

at Pittsburg. A new steam 
shovel was completed last 
winter by which a train of 
35 to 40 cars will be loaded 
with ore in two hours. A 
40-ton car of coal can be 
unloaded and partly trimmed 
in the ship in thirty-six 
seconds. Most of the 
switching at Conneaut is 
done by the haulage system 
(a cable running between 
the rails at about 4 miles 
per hour). The operating 
officers believe that with this railroad the utmost limit of all 
that is possible in solving the problem of cheap transportation 
has been reached. Their achievement shows what remains to 
be done and can be done by the other railroads of this country 
in the same direction." 




Ore-discharging machines at Conneaut. 



The only gap that now remained was that on the Lakes. 
To fill it the company should operate its own line of steamers. 
While the contract with the Bessemer Steamship Company 
provided for the conveyance of 1,200,000 tons a year, the steel 
company was dependent upon the small fleet of ships owned by 
individuals to a greater extent than seemed desirable ; and early 
in 1899 the Oliver Iron Mining Company purchased the Lake 
Superior Iron Company's fleet of six vessels, each capable of 
carrying 3,000 tons, as well as its ore properties on the Mar- 
quette range. Before taking over these steamers at the end of 
the year, certain changes in organization were made in con- 
formity with the suggestions of Mr. Oliver, contained in the 



LAKE TRANSPORTATION 



273 



following letter to the Board of Managers of the Carnegie Steel 
Company : 

Under our attorney's advice, taking in view the legal com- 
plications that might arise in a miningcompany being interested 
in navigation, we have settled that our venture in the purchase 
and building of vessels on the Great Lakes should be conducted 




Ore docks. 



under an organization distinct from the Oliver Iron Mining 
Company. We have taken out a charter and organized the 



Pittsburgh Steamship Company. 

The officers of the Company, the Board of Directors and 
the Stock interests are identical with those of the Oliver Iron 
Mining Company. 

To finance the Company, I propose, first a paid up capital 
stock in cash of One million dollars ($1,000,000.00), and the 
issue of 5;^ gold bonds, interest payable semi-annually, of four 
million dollars ($4,000,000.00). The Union Trust Company of 
Pittsburgh to be the trustee of a mortgage covering all the 
vessels of the fleet, and to issue to the purchasers of the bonds 
interim certificates for eighty per centum of the cost of the 
vessels on the delivery to them of satisfactory bills of sale or 
chattel mortgage for each vessel as it is turned over by the 
seller or the builder of the vessel to the new Company; that is 
18 



274 A RELUCTANT SUPREMACY 

to say, as fast as each vessel is delivered to the new Company, 
the bondholders advance 80/0 of its cost, and the stockholders 
the remaining 20% of its cost. On the completion of the fleet, 
as now projected, bonds in proper shape, reciting what vessels 
they cover, with proper requirements for insurance, etc., will 
be exchanged by the Trust Company for the interim certificates 
above recited. The cost of the vessels under contract (which 
is all we propose to acquire this season) aggregate about two 
million, nine hundred thousand dollars ($2,900,000.00). 

Kindly advise me if the above plan is satisfactory to the 
Carnegie interests. 

Bonds to be payable as follows : 

Series "A," Five years $1,000,000.00 

Series " B," Ten years 1,500,000.00 

Series " C," Fifteen years 1,500,000.00 

Total $4,000,000.00 

In this way, on the very day of Mr. Prick's retirement from 
the chairmanship of the Carnegie Steel Company, the huge 
corporation became a complete industrial unit, owning every- 
thing it needed in its business, controlling every movement of 
its material, and in all its operations, from mining the crude 
ore to the shipment of the finished steel, paying no outsider a 
price. 




Ore docks by night. 




In a Mesaba mine. 



CHAPTER XVIII 

THE WORKINGS OF THE CORPORATE MIND 

IN a former chapter refer- 
ence was made to what was 
there called the mental evo- 
lution of the great indus- 
trial organism whose growth 
we are following, and a hint 
was given of the important 
part played in it by Mr. 
Frick. One of the most 
conspicuous directions of 
this mental growth was that involved in the systematization of 
the consultative work of the Board of Managers. 

Although this board was the brain of a great body, its func- 
tions were long performed without regularity or method, and 
the results of its work were but imperfectly recorded. This is 
one of the most surprising features of this great business ; for 
while the workings of every furnace and every machine were 
carefully watched and tabulated, the operations of the greatest 
machine of all, its brain, were spasmodic, unmethodical, and 
for the most part unnoted. The Board of Managers met by 
chance, there being no fixed time for its meetings. Consulta- 
tions and deliberations were conducted in a haphazard way, and 
often no minutes of them were taken. If an important change 
was to be made, perhaps a meeting would be called; or it 
might happen that the managers most interested in it would 
have an informal meeting at the works, when the matter would 
be decided. The old minute-books of the various companies 
often show a gap of several months without an entry. 

27S 



2/6 THE CORPORATE MIND 

With the accession of Mr. Frick to the headship of the 
concern, this was promptly changed. A rule was made that 
the Board of Managers should meet every Tuesday at lunch, and 
that a full report of their subsequent deliberations should be 
kept. Similarly every Saturday, at noon, the different super- 
intendents and their assistants, some foremen, purchasing and 
sales agents and their principal assistants, to the number of 







/« 



T' irri 




Superintendents at lunch. 

thirty or more, met about a larger table, and, after lunching to- 
gether, talked over all matters of common interest. Here the 
unfriendly rivalry of former times gave place to a spirit of good 
fellowship and mutual helpfulness. Around the friendly board 
it was impossible for two important officers to refuse to speak 
to each other for five years, as happened more than once in the 
past. And such competition as grew up among them was that 
of friends animated by a common purpose — to do the best each 
could for the association. 



MINUTES OF A BOARD MEETING 277 

Of course none but officials were ever admitted to these 
meetings ; and the results of their deliberations were kept in 
profound secrecy. Except for the copies of the minutes sent 
to Mr. Phipps and Mr. Carnegie, the records were never seen 
by any one not entitled to attend the meetings in person. To 
give completeness to this narrative, however, and to illustrate 
in a practical way the workings of the corporate mind, the 
official record of one of these meetings is here given. Nothing 
has been changed in it, except that a long statement made by 
Mr. Frick is omitted. This concerned the proposed sale of the 
Carnegie- Frick companies, or in default of a sale, their consoli- 
dation. It is referred to elsewhere. In other respects the fol- 
lowing is an exact reproduction of the official minutes of a meet- 
ing held in January, 1899. It is possible that many readers 
will find an intrinsic interest in the discussions of these "young 
geniuses " — some of whom, by the way, have already reached 
the dignity of grandsires. 

At a meeting of the Board of Managers of 

The Carnegie Steel Company, Limited, 

held at the general offices of the Association, Carnegie Build- 
ing, Pittsburg, Pa., at 12 :30 p.m., on Monday, January 16, 1899, 
there were present MM. Frick (chairman). Singer, Schwab, 
Peacock, Phipps, Clemson and Lovejoy (secretary); also MM. 
George Lauder, James Gayley and H. P. Bope. (Mr. Curry in 
Pasadena; Mr. Wightman in Florida.) 

The minutes of the meeting of the Board of Managers held 
January loth were read, and, on motion, approved. 

The following communication from the president to the 
Board, under date- of January 12th, was read: 

*' As reported by Mr. Phipps last week, we have finally 
closed for the purchase of the Bethlehem Plate Mills, which 
purchase the Board has already approved. 

" The Mills, as you are aware, comprise a Slabbing Mill of 
the latest design; a 128'' Plate Mill, complete in every particu- 
lar; and a 42" Universal Mill of the latest and best construc- 
tion. There are no changes in all these Mills we would suggest. 



278 THE CORPORATE MIND 

'' We should have a capacity of 12 to 14,000 tons of Plates 
out of these Mills, besides some excess of Slabs which could 
be sold outside. 

" It is estimated that the cost of putting these Mills in oper- 
ation; foundations, buildings, furnaces, etc., will be approxi- 
mately ;^500,ooo.oo, and would like the Board to authorize this 
expenditure." 

The following communication from W. E. Corey, general 
superintendent, Homestead Steel Works, to the president, un- 
der date of January i ith, was read : 

"The building of ten (10) new Furnaces at Open Hearth 
No. 3 will cost about ^80,000.00 per Furnace, or a total of 
^800,000.00. This, of course, includes all cranes, tracks, grad- 
ing, filling in, etc., and also a stripper for the stripping of large 
Ingots for the new Slabbing Mill. 

" Kindly authorize the expenditure of this money, and 
oblige." 

The following communication from the president to the 
Board, under date of January 12th, was read: 

" The demand for Open Hearth, instead of Bessemer Steel, 
is increasing each day. A careful calculation would indicate 
that ten (10) additional Open Hearth Furnaces are necessary 
lor our Homestead Steel Works. 

" Enclosed please find Mr. Corey's estimate and recom- 
mendation for same. 

" We would propose making the Furnaces identical in every 
particular with those now built, which have been very satisfac- 
tory. 

" Would recommend that the Board permit me to proceed 
with the erection of these Furnaces at once. They can be 
completed within about five months." 

MM. Phipps and Clemson moved the authorization of an 
appropriation of ^1,300,000.00, in accordance with the recom- 
mendations of the president. 

Mr. Frick : " That cost appears high." 

Mr. Schwab : " Mr. Corey admits that it is high, but does not 

want to get caught again with an insufficient appropriation. 

He will not waste money, and, if all is not needed, so much 

the better." 



COSTLY ADDITIONS AUTHORIZED 279 

Mr. Frick : " We must have the Furnaces anyway, and may as 
well appropriate the outsid'e cost. These are large amounts, 
but the whole matter has been thoroughly discussed outside 
of the Board Meetings, and all appear satisfied." 

Mr. Sc/nvab : " These Furnaces will increase our capacity 30,- 
000 tons of Open Hearth Ingots per month. This pur- 
chase renders it unnecessary to build the Plate Mill which 
was agreed upon, although no appropriation was author- 
ized when we discussed the Car Works. There is no 
Plant I know of so well equipped as this. It is the latest 
and best in Plate Mills." 

Mr. Lander: " It is the right thing to do." 

The motion was adopted; the vote being unanimous, and 
all present concurring. 

The following communication from W. E. Corey to the 
president, under date of December 30th, was read : 

" In line with my conversation with you concerning the 
changes in Beam Yard, beg to make the following report. In 
the first plan as proposed in my letter of November i8th, it 
will necessitate the expenditure of ^40,000.00, and would en- 
able us to make an average delivery of 10 days time on all 
Beam and Channel orders. 

" Under this arrangement ^0% of all Beams and Channels 
would be cut from stock, which would increase the cost per ton 
on Beams and Channels shipped from Homestead eight cents 
per ton. 

*' Now in going over this matter the second time, it seems 
to me that it would not be a paying investment to spend $40,- 
000.00 and increase the cost of production, if there is any other 
alternative. 

" Now if our customers could be satisfied with an average 
delivery of 15 days on all orders, I would recommend that noth- 
ing be done towards this expenditure for another year, or until 
it is decided to move the Fitting Shop. 

" I would, therefore, ask that you authorize an expenditure 
in the Beam Yard of $15,000.00, to be expended as follows: 
$6,000.00 each for two ten ton electric traveling cranes, one to 
be placed immediately outside the 40" Mill at the roadway, and 
the other at No. 3 roadway to handle material from the small 
saw ; $3,000.00 to be spent in moving small saw 40 feet due 
west from the present location, and making necessary change 
in tracks. 



28o THE CORPORATE MIND 

** This would enable us to make 1 5 day deliveries without 
increasing the cost of production. 

" Kindly advise me at your earliest convenience what you 
think of this proposition." 

Mr. Schwab : " These are only additional Cranes for the Beam 
Yard equipment we have now. While we save nothing by 
the expenditure, we save in time of filling orders." 

Mr. Frick : " Money spent in expediting delivery is well spent, 
and especially now when we expect so large a business. " 

Mr. ScJnvab : " When this matter first came up in November, 
I was unwilling to recommend the expenditure of ^40,- 
000.00, and referred Mr. Corey's letter back to him. 
When we rebuild the Fitting Shop, we can spend the 
^40,000.00 to very much better advantage. I would 
recommend the expenditure of ^15,000.00." 

On motion, (Peacock and Singer), the expenditure of $15,- 
000.00, as recommended by the president, was authorized ; the 
vote being unanimous. 

The following letter from W. E. Corey to the president, 
under date of January i ith, was read : 

*' Please find below an approximate estimate of expenditure 
for improvements at our Carrie Furnaces, as recommended by 
Mr. G. K. Hamfeldt, Superintendent. 

Furnace with new shell, down-take, and dust-catcher with 
linings, incline with top arrangement, hoisting engine, 
and one coke and limestone bin, with track for stock 
yard, complete $136,000.00 

Extension and relining of two stoves 18,000.00 

One compound condensing blowing engine, 40" X 72" X 
60" X 84", with foundation, extension to Blowing En- 
gine House, with foundations and Piping 46,000.00 

Weise Condenser, 3600 HP, complete 18,000.00 



Total $218,000.00 

" The detailed plans for same have not as yet been com- 
pleted, but, as soon as completed, I will arrange with Mr. Gay- 
ley to go over them with Mr. Hamfeldt. 

" Kindly advise me if you will authorize the expenditure of 
this money." 

MM. Phipps and Clemson moved the authorization of an 
expenditure of ^218,000.00. 



PRICK TELLS SECRET OF SUCCESS 281 

Mr. Schwab: "This will put Carrie No. 2 in practically the 
same shape as our other Furnaces, and will make the Fur- 
nace equal to "F" or *'G." It is in this direction we 
must go in making improvements." 

Mr. Gayley (In reply to the chairman) : " It should increase 
the product 100 tons per day." 

Mr. ScJnuab : " We have no place to use the surplus steam at 
Carrie, and it will not pay us to compound the engines 
there at present. We can compound them later on, if it is 
found advantageous." 

Mr. Singer : " This is a wise thing to do. " 

Mr. Peacock : " We should put all our Furnaces in good shape." 

Mr. Gayley : " I am satisfied we need to do this." 

Afr. Clcmson: "It is a mistake to do anything else but keep 
our Furnaces in the best possible condition." 

Mr. Lander: " I think it is the right thing to do." 

Mr. Phipps : " We all expected to do this when we bought the 
Plant." 

Mr. Lovejoy : "It is in line with our policy, and should be 
done." 

Mr. Gayley : " The Carrie Furnace Company intended to do 
a part of this work, if they had not sold." 

Mr. Flick : " It is a large amount ; but to our willingness to spend 
large amounts in improvements, we owe our success." 

The motion was adopted ; the vote being unanimous. 

Mr. Schwab: "At a Meeting in New York of our principal 
Partners and Managers, it was decided that the following 
changes and new Interests should be made, commencing 
with January i, 1899; subject to the approval of the 
Board and of the Shareholders. 

" It is proposed to give Y/o ^^ ^^^^ ^^ ^^^ following : 

W. B. Dickson ; 
A. C. Case; 
John McLeod; 
Charles W. Baker; 

and to give an increase of 

\% to James Gayley ; 
\% to D. M. Clemson ; 
^% to A. M. Moreland; 
■^% to L. T. Brown ; 
1% to J. E. Schwab." 



282 THE CORPORATE MIND 

On motion (Singer and Peacock), the following resolution 
was adopted : 

''Resolved ; That F. T. F. Lovejoy, Trustee, be and is now 
hereby directed, authorized and empowered to transfer out of 
Trust ' N ' certain Capital of this Association, to the per- 
sons and in the amounts named, as follows : 

To James Gayley, . \% or ^27,77778 
D. M. Clemson, ^^ or 41,666.67 
A. M. Moreland, \% or 2'j,'jjj .'j'^ 

at its Book Value at the close of business December 31,1 
subject to all of the conditions of the "Iron Clad Agreement," 
and subject also to confirmation at the next Meeting of the 
Shareholders; and 

'^Resolved ; That having so done, F. T. F. Lovejoy be 
released and discharged from any further accountability as to 
his Trusteeship for the seven-eighteenths per centum of the 
Capital of this Association, the transfer of which is authorized 
hereby;" 

the vote being unanimous. 

On motion, (Singer and Peacock), the following resolution 
was adopted : 

^^ Resolved ; That F. T. F. Lovejoy, Trustee, be and is now 
hereby directed, authorized and empowered to transfer out of 
Trust ' N ' certain Capital of this Association, to the Trust 
Accounts and in the amounts named, as follows : 



To Trust 


*'W" 


for L. T. Brown, 


\% 


of 


\% or 


$27,777.77 


To Trust 


"AB" 


for J. E. Schwab, 


f 


of 


\% or 


55,555.55 


To Trust 


''AE" 


for W. B. Dickson, 


1 
"9 


of 


i^or 


27,777.7% 


To Trust 


"AF" 


for A. C. Case, 


1 
9" 


of 


\% or 


27,777.7s 


To Trust 


"AG" 


for John McLeod, 


i 


of 


\% or 


27,777.7s 


To Trust 


'AH" 


for Chas. W. Baker, 


i 


of 


i^or 


27,777.7s 



the same having been sold to the said persons at Book Value 
December 31, 1898; subject to all of the conditions of the 
' Iron Clad Agreement,' and subject also to confirmation at 
the next Meeting of the Shareholders " ; 

the vote being unanimous. 



THE CONNEAUT TUBE PROJECT 283 

Mr. Schwab : '' As the members of the Board are aware, I go 
East tonight and sail for Southampton on Wednesday, 
expecting to be back here April 4th. During my absence, 
the plans for the new Car Works will proceed without any 
delay, and be ready with actual bids for all the machinery 
and other Contract items by April ist, when an estimate 
of the cost will be given to the Board and an appropriation 
asked for. No expenditure will be necessary meantime." 

(In reply to the chairman) : 

" I have not figured closely on the cost at all, but would 
say in round figures the Works will cost from $750,000.00 
to $1,000,000.00." 

Mr. Peacock: *' I think while we are on the subject of Car 
Works, it would be well to consider our present position 
with the new Steel Car combination. They have already 
approached us on the subject of a Contract, and would be 
willing to buy probably i ,000 tons of Steel per day, pro- 
vided we stay out of the Steel Car business. I think, 
under a favorable Contract, I would favor this, especially 
since they are re-organized, and will be in good financial 
condition and safe to sell to." 

Mr. Schzvab : " I do not think anything should prevent our 
going ahead with our Car Works." 

Mr. Clemson: "There is room for two, and they will have to 
come to us." 

Mr. PJiipps : " I would favor going ahead." 

Mr. Lauder : " It would bear some thought, but, on the whole, 
I think I would go ahead with the Works." 

Mr. Singer : *' I think we should go ahead with our plans, but 
I am a little inclined to agree with Mr. Peacock. There 
is a great deal of detail connected with the Car business, 
and we will probably make as much money if we sell the 
Plates as if we turned the Plates into Cars and sold them." 

Mr. Gay ley : ** I would go ahead with the Works." 

Mr. Clemson : " I would build the Car Works, and would also 
look into the Steel Pipe business. I believe there is 
money in that." 

Mr. Lovejoy : " I think we should go ahead with the Works, 
believing we can sell both Plates and Cars, and, having the 
Car Works, we can compel Schoen-Fox to buy from us." 

Mr. Prick : " Is our Car as good as the Schoen or Fox car.? " 

Mr. Schwab : " I think it is better, but it is heavier. We 
expect to improve on it, and I believe we can make it as 



284 THE CORPORATE MIND 

light as theirs, and, at the same time, a better and stronger 
Car." 
Mr. Frick : '' I am strongly in favor of going ahead. There 
will be room for both." 

Mr. Clemson : " We brought in some good Gas Wells during 
the latter part of December, and are now in as good shape 
for Gas as we were this time last year. I will guarantee a 
sufficient supply of Gas for this year." 

Mr. Frick: "That is very gratifying news." 

At this point, Mr. Clemson withdrew from the meeting, 
having been called as a witness in a case pending, 

A letter from Andrew Carnegie to the president, under date 
of December 30th, was read, as follows : 

" Several times I have been upon the point of writing you 
about settling with James C. Carter, the lawyer here. 

" We consulted him in regard to our claim against the Gov- 
ernment for remission of fine imposed [for supplying defective 
armor-plate]. I suppose it is the general feeling that we had 
better not disturb that question, better just let it pass. If you 
find this to be so in the Board, then I should like a note to be 
written to Mr. Carter stating that we do not wish the case pur- 
sued any further and to send us his bill. His address is No. 
277 Lexington avenue." 

Mr. Frick : " Suppose Mr. Phipps should write to Mr. Carter 
in effect as follows : 

" ' We have not yet decided whether or not we wish to 
abandon our claim, but, should we decide to press it, we 
would wish to retain him. Meantime, however, as the 
case has been hanging fire for some time, we would be 
glad to have a bill for his services to date, which we will 
pay.' 

'' That complies with Mr. Carnegie's wish, and, at the 
same time, does not close the matter absolutely." 

This met with general approval, and, on motion, the matter 
was so decided upon. 

Mr. Frick : " I would like to ask Mr. Peacock if he is selling 
much Material today, and if he is getting advanced 
prices.^ " 



AN INTERESTING CONTRACT 285 

Mr. Peacock : " I think the only increase in Billets sold, shown 
in our statements during the last four weeks has been 
where we have sliding scale Contracts. We have today 
nothing to sell but Structural Material, on which we are 
getting good prices. 

" We have under consideration a Contract with the 
American Tin Plate Company of New Jersey, which has 
been agreed to, subject to the action of the Board." 

The Contract was read in full, the features thereof being: 

Quantity: 125,000 gross tons of Tin and Black Plates, 
Bars (not including Sheet Bars) per year, for a period of Five 
(5) years, from July i, 1899, and thereafter until after One 
year's written notice, which may be given by either party, on 
or after Jul}- i, 1903. 

The amount to be 

^j„-„„ added to the price 

V^^^^- of Pig Iron for 

When the Price of Pig Sheet Bars shall 

iron per gross ton is : be : 

$ 8.yg or under ; $5-45 

9.00 to g.99 5.60 

10.00 " 10.99 5-75 

11.00 " 11.99. . . 6.00 

12.00 " 13.99 6.25 

13.00 " 14.99 Ci-SO 

13.OC " 14.99 6.75 

15.00 " 15.99 7.00 

16.00 or over , 7.25 

Price to be fixed monthly and averaged for six months. 

Payments : Cash on the 20th of each month. 

Deliveries : Approximately 10,416 tons per month. 

Buyer may specify up to \oio Basic Open Hearth at 1.50 
per ton advance. 

Buyers may not re-sell without first putting Material through 
a process of manufacture. 

Sellers agree, so long as the Buyers perform their part of 
this Contract " They will not sell to any competitive person or 
Company in the United States, Tin or Black Plate Bars of the 
character covered by this Contract ; " and Sellers agree "Not 
to enter into competition with The Carnegie Steel Company, 
Limited, in any of the products which The Carnegie Steel 
Company, Limited manufactures, during the life of this Con- 
tract. " 



286 THE CORPORATE MIND 

Buyers also agree, if their capacity be increased, Sellers 
shall have the privilege of selling the same proportion of the 
new requirements. 

Any dispute as to price to be referred to A. H. Childs. 

Mr. Frick : '' Would it not be well to have all matters of dis- 
pute under this Contract referred to an Arbitrator? " 

Mr. Peacock : " It might be, although our Attorneys advise us 
our position is better if we do not agree to defer all mat- 
ters to an Arbitrator, since we would probably be com- 
pelled to appeal to the Courts to sustain the award of an 
Arbitrator, and we might as well fight out the whole thing 
in Court." 

Mr. Frick : " I do not agree. The decision of an Arbitrator is 
usually binding and conclusive among reputable business 
concerns." 

All spoke in favor of the making of this Contract, and, on 
motion, (Schwab and Phipps), its execution was authorized ; the 
vote being unanimous. 

Mr. Peacock : ''This represents 25^ of their total requirements 

of last year." 
Mr. Schwab : '' It is more than double what we sold last year." 

Mr. Peacock : " We have in process of negotiation a Contract 
with the National Transit Company for Plates, but it is 
not quite in shape to report to the Board. It also is a 
sliding scale, and on $10.00 Pig, gives us $1.15 for Sheared 
Plates." 

Mr. Schwab (In reply to the chairman) : 

''That would give us $8.00 per ton profit." 

On motion, (Phipps and Schwab), the making of this Con- 
tract was left with Mr. Peacock, with power to act. 

MM. Gayley and Clemson, appointed as a Committee De- 
cember 13th, made the following report : 

" The Committee appointed to investigate the property of 
the Pittsburg & Conneaut Dock Company, at Conneaut Har- 
bor, Ohio, to determine if land was available for the erection of 
a Blast Furnace Plant, would report as follows : 

" A number of plans have been prepared to determine the 
best location, and with such plans before us a personal inspec- 



288 THE CORPORATE MIND 

tion of the property was made during the past week. The plot 
selected is just east of the present coal unloading slip. The 
new drawbridge crossing the creek to the new dock will permit 
the largest ore vessels to pass. At a point on the creek 300 
feet east of the drawbridge the vessels can turn into a slip, 
which will have to be dredged, which allows ample room for 
stock yards and furnace plant on the East side. By this ar- 
rangement, there is obtained on the Western side a strip of 
ground 400 feet wide which can be used by the Dock Company 
in further dock extensions, the length of such dock can be from 
1,000 to 2,000 feet long as found necessary to dredge. There 
is provided in this arrangement ample room for a furnace plant 
between the slip and the hillside, and lengthwise will be found 
room for a number of furnaces. The low ground extending 
along the railroad for some distance affords an excellent space 
for disposal of slag for many years, or the slag can just as read- 
ily be conveyed to the upper end of the new dock and dumped 
into the lake, and in this way providing for dock extensions. 
There is sufficient flat land adjoining the furnace location, of 
which the Dock Company owns part, which if filled with slag 
would be suitable for Steel Works and other manufactories. 

" The slip your Committee had in view for a furnace site 
comprised about 25 acres, with plenty of just as suitable prop- 
perty adjoining. 

" The dock frontage at Conneaut for discharging ore is as 
follows : 

Old Dock 1,900 feet. 

Direct unloading Dock 1,200 " 

New Dock (under construction) 1,100 " 

Total 4, 200 ' ' 

New Dock can be extended i , 100 ' ' 

Furnace Dock as outlined i ,000 ' ' 

Making a Total of 6,300 feet. 

and this can be increased by extensions into the lake and of the 
Furnace slip. The above figures are for ore unloading alone, 
and do not include the side of dock for coal or rail unloading. 

" A Furnace at Conneaut Harbor making 300 tons of iron 
per day would require per annum 100,000 net tons of Coke and 
40,000 gross tons of limestone." 

Mr. Frick : " We will leave that report on the Minutes for con- 
sideration, and take up the matter at some future time." 



THE CONNEAUT SCHEME 289 

Mr. Gay ley : " We have made^the following purchases of Man- 
ganese Ore : 
" Caucasian Ore : 

" Everitt & Company, 10,000 tons at 10^ pence, ship 
ment March to September. 

" F. Haeberlin, 10,000 tons at io5^ pence, shipment 
March to October. 

"John Carr & Company, 6,000 tons at 10^ pence, 
shipment March to May. 
** Cuban Ore : 

"We have purchased from the Ponupo Mining & Trans- 
portation Company, their product for this year up to 
25,000 tons at 24 cents per unit, at sea-board." 
Mr. Gay ley (In reply to the chairman) : 

" We have several old Caucasian Ore Contracts at lower 
prices than these, but find it difficult to get deliveries. 
Making these Contracts, we will be able to get deliveries 
under both the old and new Contracts. These prices on 
Caucasian Ore are up about ^1.50 per ton, VN^hile the Cu- 
ban Contract has come down about $2.00 per ton. The 
average increase in the cost of Ferro-Manganese this year 
will be ^1.50 per ton." 
Mr. Peacock : " But we are getting from ^4.00 to ^5.00 per ton 
more for Ferro than we did a year ago." 

On motion, (Schwab and Peacock), the purchases reported 
were approved, ratified and confirmed. 

Mr. Gayley : " The Operations at Conneaut Dock, for the five 
days ending January 13th, were as follows: 

Receipts, None. 

Shipments, 11,359 tons. 

(In reply to the chairman) : 

" Everything at the Docks will be ready for next year's 
business." 
Ml'. Erick : " It would be well to bear in mind the necessity of 
getting the Cars under Contract with the Schoen Company 
in time. Mr. Gayley might put a man on to look after 
this." 

Mr. Bope, as assistant general sales agent, submitted the 
following report : 
19 



290 THE CORPORATE MIND 



STATEMENT OF SALES OF STANDARD RAILS SINCE 
NOVEMBER i8, 1898. 

Sales. Options (minimum). Totals. 

Carnegie 326,623 46,000 372,623 

Illinois 342,713 36,000 378,713 

Cambria 65,266 65,266 

Colorado 20,698 20,698 

Total 755,300 82,000 837,300 

" All of our own sales above reported have been included 
in our report of obligations following, although formal Contracts 
for only 197,000 tons have been executed." 

** The statement given below compares our estimated obliga- 
tions (for the classes of material specified) at the opening of 
business, Friday, January 6 and January 13, 1899: 

Material. Jan. 6th. Jan. 13th. Difference. 

Rails 564,110 556.541 Loss 7,569 

Billets, Blooms, Sheet 

Bars, etc 445,227 433,739 Loss 11,488 

Structural and Ship Ma- 
terial 174,564 180,923 Gain 6,359 

Axles and Bars 38,110 39,742 " 1,632 

Plates 41,693 46,245 " 4,552 

Total 1,263,704 1,257,190 Loss 6,514 

"All in Gross Tons, based on our minimum obligations." 

Mr. Phipps : " As the members of the Board are aware, we 
have been building a foot-bridge over the Railroad at Du- 
quesne, and are asked to sign a Contract, agreeing to keep 
it in good order." 

On motion, (Phipps and Schwab), the execution of such a 
Contract was authorized ; the vote being unanimous. 

Mr, Phipps : " We have divided the Fawcett Land into Lots, 
and a plan has been prepared showing 29 Lots, on each 
side of the boulevard. This plan should be adopted, in 
order that it may be recorded in the Court House." 

On motion, (Schwab and Peacock), the plan submitted was 
approved and adopted ; the vote being unanimous. 



PROJECT TO SELL OUT 291 

Mr. PJiipps : "Collections haye been coming in so freely that 
we have found it advisable to anticipate our Ore payments, 
up to and including those for March." 

Mr. Lander : "Referring to the question of Lake freight on 
Ores : I think we can transport much cheaper than it is 
being contracted for, by building large barges and handling 
these by tugs in relays, running the business as a Railroad 
would transport cars. The barges should hold say 10,000 
tons ; two barges per day during the shipping season run- 




Whaleback ore steamers in port. 

ning regularly would give us our supply, and would, I be- 
lieve, although I have not figured on it in detail, effect a 
saving of 40 to 50^^ in freight cost." 

Mr. Frick : " In this connection, I was told by W. L, Brown 
that they transported ore from Escanaba to South Chicago 
for 17 cents; That should be looked up by Mr. Gayley, 
and we should also bear Mr. Lauder's suggestion in 
mind. " 

Mr. ScJiwab : " I think it practicable, but do not see where the 
great saving would come in." 

Mr. Gayley : " The barges suggested are only 3,000 tons larger 
than those now in use. The traffic is a little uncertain 
on the Lakes and tugs might have to lie over and lose time. 
This is what keeps the rates higher than they would be 



292 THE CORPORATE MIND 

otherwise. The suggestion is worthy of investigation, and 
I will take it up." 

Mr. Frick here made the statement concerning the reorgani- 
zation of the company, and asked : " Whom will you name as 
the Committee.? " 

On motion, (Schwab and Singer), MM. Frick, Peacock, 
Phipps (L. C.) and Lovejoy were appointed as the Committee, 
in charge of the Organization of The Carnegie Company, 
Limited ; there being no dissent. 

Mr, Frick : " The Committee will report progress to the Board 
from time to time ; meanwhile, all should consider this, 
and be prepared to make suggestions on any points that 
occur to them. 

" I may add that the question of Buying and Selling 
Value of Capital Stock in the new Company — that is, what 
will be paid to retiring Partners, or what will be paid by 
new Shareholders admitted — is having careful consider- 
ation, will be fixed on a fair basis, and will be set forth in 
an Agreement similar to our present ' Iron Clad Agree- 
ment,' to be signed when the new Company takes posses- 
sion." 



On motion, adjourned. 
Approved at meeting held. 

Chairman Board of Managers. 

Copy to A. C, New York; 

H. P., Jr., Washington, D. C. 

H, M. C, Pasadena. 
17 January, 1899. 



(Signed) LOVEJOY, 

Secretary. 



CHAPTER XIX 



THE ZENITH OF PROSPERITY 




-y^ ,, IN 1889 negotiations were 
' :; entered into by Andrew Car- 

negie with certain English 
" ' .^ bankers and capitalists with 

a view of selling out the 
iron and steel enterprises with 
m which he was connected. At 

that time British investors were 
absorbing American industrial 
stocks with astonishing avidity ; and 
Carnegie, believing the zenith of pros- 
perity had been reached in his own 
business, thought the time an opportune one to sell out to 
the English. The project was resisted by Mr. Phipps, who 
had sold seven-eighteenths of his interest the previous year; 
but he finally yielded to his partner's insistence and gave a 
reluctant consent to the sale of the properties. 

So far as could be seen at the time, Carnegie's lack of faith 
in the future was justified. Three years before, the profits of 
the several companies had amounted to nearly three million dol- 
lars. In 1887 they aggregated close on three and a half mill- 
ions. Then in 1888 they dropped to $1,941,555; and it 
seemed a prudent measure to slip out of the business on what 
looked like the passing boom of 1889. The negotiations, how- 
ever, had no satisfactory result; and Mr. Phipps, hearing of 
their failure, expressed his relief. Incidentally he gave ex- 
pression to his opinion on the impropriety of selling out to a 

293 



294 THE ZENITH OF PROSPERITY 

trust — an opinion that makes strange reading nowadays. Here 
is the beginning of the letter he wrote to Mr. Carnegie : 



Grand Union Hotel 

Dresden, Saxony. 
Nov. I, I 



Dear Andrew 



Few pleasures on a foreign trip are equal to a friendly letter 
from home like yours of the i8th. 

I am gratified that we are not to go out of business, and 
especially to make room for a trust, which is by no means a 
creditable thing. As you say the tariff would be repealed on 
rails and rightly so. 

With Mr. Frick at the head, I have no fear as to receiving 
a good return upon our capital. Being interested in manufac- 
turing keeps us within touch of the world and its affairs in- 
stead of being on the shelf. Of course I am anxious that 
you should not be worried by the business — only pleasantly 
interested. . . . 

Yours truly 

H. P. Jr. 

It was a very fortunate thing for Carnegie, Phipps, and all 
the partners that the project failed; for in 1889 the profits cf 
the year amounted to ^3,540,000, the largest up to that date in 
the history of the various enterprises, despite the fact that rails 
were down to their lowest point, ^29.25. Next year's profits 
were $5,350,000. The effect of Mr. Frick's management w^as 
beginning to be seen. In 1891, owing to dwindling prices and, 
in larger measure, to excessive cost of labor at Homestead, there 
was a falling off of a million dollars; and a still further reduc- 
tion took place in 1892, the year of the strike. The profits this 
year were only $4,000,000. In 1893 — panic year — a further 
reduction of a million dollars was recorded; and this marked 
the bottom. Thenceforward the annual balance sheets showed 
an ever-increasing profit, regular and slow at first, then by 
extraordinary leaps and bounds. Here is the gratifying 
record : 



PROFITS NOW FIRST PUBLISHED 295 



NET PROFITS OF THE CAPTnEGIE ASSOCIATIONS. CARNEGIE 
BROTHERS & CO., LTD. (TO 1892), CARNEGIE, nilPPS & CO., 
LTD. (TO 1892), AND THE CARNEGIE STEEL COMPANY, 
LTD. (FROM JULY. 1892). 



1889 $3,540,000* 

1890 5,350,000 

1891 4,300,000 

1892 4,000,000 

1893 3,000,000 

1894 4,000,000 



1895 $5,000,000 

1896 6,000,000 

1897 7,000,000 

1898 11,500,000 

1899 21,000,000 

plus $4,500,000 reinvested. 



1 ^ c 

These sums, added to those given on a previous page for the 
years 1875 to 1888 inclusive, bring the aggregate net profits of 
all the Carnegie associations to the impressive total of ^93,- 
391,005.41. In the year 1900 — the last of its separate exist- 
ence — the Carnegie Steel Company made a profit of nearly 
$40,000,000, and a sum was taken from the Contingency Fund 
to bring it up to this even figure. 

It is believed by the Carnegie officials, and with some show 
of reason, that this magnificent record was to a great extent 
made possible by the company's victory at Homestead. From 
that time on the firm profited by the heavy investments it had 
made in labor-saving machinery; and costs got so low that one 
year when the Carnegies made over four million dollars, their 
chief competitor, the Illinois Steel Company, had upwards of a 
million dollars' loss. The following year the Carnegies made 
over five millions, while the Chicago company made only ;^36o,- 
000. By 1897 the cost of steel rails on cars at the Braddock 
mill was only $12 a gross ton ! 

One of the most marked economies in production resulted 
soon after the Homestead strike, when Mr. Frick created a posi- 



* At this date a change was made in the method of accounting, by which the 
odd sums were dropped from Profit and Loss and put into a " Contingency Fund." 
Later any amount under half a million was so disposed of ; and, on the other hand, 
when the Profit and Loss account showed an odd sum of more than half a million, 
enough was borrowed from the Contingency Fund to make the total balance in 
even millions. That is why, on another page, the profits of the association are 
given to within a cent, while here they are stated in even millions. 



296 THE ZENITH OF PROSPERITY 

tion, without any distinctive name, for Mr. P. R. Dillon, who 
had done such excellent work at the Union Iron Mills and at 
Beaver Falls. His duties were advisory, covering mechanical 
as well as labor equipment, and extended to every department 
of the company's service. By skilful adjustments he increased 
the capacity of one group of workers after another, here adding 
a man, there taking two away; in one place gearing up the 
machinery, in another reducing it, until a high degree of me- 
chanical perfection was reached, and there was not a super- 
fluous wage-earner in the shops. At Homestead alone five 
hundred men were thus saved ; and in all the Carnegie works 




The Carrie Furnaces. 

the reductions amounted to over fifteen hundred workmen. 
And this without diminishing the output of a single group. 
Indeed, the better practice thus resulting soon brought back the 
displaced men ; and the tonnage of the works increased more 
rapidly than ever before. The increase between 1893 and 1894 
amounted to almost as much as the entire output of the works 
in 1888, and exceeded it the following year. 

During these years and those immediately following them 
the growth of the several works was nothing less than phenome- 
nal. No great expansion was possible at the older establish- 
ments, such as the Union Iron Mills and the Lucy Furnaces; 
but at Braddock, Homestead, and Duquesne additions were 
made every year greater than the entire plant had been a short 



AMAZLVG RECORD OF GROWTH 



297 



time before. At Homestead one set of open-hearth furnaces 
was rapidly added after another, and new mills erected to finish 
the increased output of steel. In one case only sixty days in- 
tervened between the turning of the first sod and the casting of 
an ingot on the same spot. The two Carrie furnaces, just 
across the river, were bought by Mr. Frick with his usual 
issue of bonds, and the bonds liquidated out of profits. Later 
two other furnaces were added; and these great stacks have 
broken the world's record for yearly tonnage. At Duquesne 
the same nervous activity was displayed. Four huge blast- 
furnaces were built to supply the metal required by the exten- 
sive open-hearth plant that soon supplemented the two Besse- 
mer converters which Mr. Frick found there when he bought 
the works. At the Edgar Thomson works almost every year 
witnessed an addition to its great battery of blast-furnaces, un- 
til Kloman's little Escanaba stack was but as a single letter in 
half the alphabet. Here, expressed in gross tons of steel in- 
gots made, is the great record of the growth of the combined 
business of these plants under the management of Henry C. 
Frick : 



1888 332,111 

1889 536,838 

i8go 660,071 

1891 797,286 

1892 877,602 

1893 863,027 



1894 1,115,466 

1895 1,464,032 

1896 1,375,249 

1897 1,686,377 

1898 2,171,226 

1899 2,663,412 



The import of these statistics is seen by a comparison. In 
1885 Great Britain led the world in the production of steel. 
Her total output for that year was 695,000 tons less than the 
product of the Carnegie Steel Company in 1899. 

During this period the H. C. Frick Coke Company, while 
still supreme in its field, had not expanded with anything like 
equal rapidity. This was partly because it was already great 
enough to supply the Carnegie demands twice over, and partly 
because its profits and credits had been used to develop the 
steel company. Beginning as early as 1888, during the Edgar 



298 



THE ZENITH OF PROSPERITY 



Thomson strike, the credit of the coke company had been con- 
tinuously used to strengthen the steel companies ; and ambitious 
as Mr. Frick was to put the latter concerns at the head of the 
steel-producing establishments, not only of America, but of the 
world, he let the profits of his own special business go into 
blast-furnaces and open-hearth plants, when his personal promi- 
nence would have been furthered by putting them into coal 
lands and new ovens. 

In 1899 the H. C. Frick Coke Company owned 40,000 of 
the 60,000 acres of unmined coal land in the Connellsville re- 




Shoveling ore from its native bed mto cars. 



gion, 20,000 acres of surface land, 11,000 coke-ovens, 2,500 
railroad-cars, and 3,500 dwellings. Its capital was $10,000,- 
000, of which Andrew Carnegie personally owned a little over 
one-quarter, the Carnegie Steel Company about the same, and 
the rest was held by Mr. Frick and a number of smaller own- 
ers, of whom the principal ones were Mrs. T. M. Carnegie and 
Mr. John Walker. It was in no way affiliated with the Car- 
negie Steel Company, except that it worked in harmony with it. 
At times the necessities of the latter conflicted with its proper 



MORE SCHEMES TO SELL OUT 299 

interests, and then these had to give way to the Carnegie con- 
trol. 



Ten years having elapsed since the failure of the attempt to 
sell the works to English investors, new schemes of a like char- 
acter were made in 1899. For a long time past Mr. Carnegie 
had lived principally abroad, and Mr. Phipps had withdrawn 
from active participation in the affairs of the company. Mr. 
Prick's had been the guiding hand that had led the concern to 
a prosperity surpassing the dreams of the most sanguine of his 
colleagues; and in all plans for the future his continued leader- 
ship seemed a necessity. But Carnegie was loath to resign in 
favor of one whose prominence threatened to overshadow his 
own; and the plans he made for his own final withdrawal in- 
variably included the simultaneous resignation of Frick. And 
Frick, full of energy and not yet fifty years of age, had no 
thought of resigning; so that the plans never got beyond the 
nebulous stage until the shock of litigation forced them into 
some degree of definiteness. The result was an illustration of 
what Herbert Spencer calls "a consolidation effected by war." 

Before dealing with this sensational suit and the causes 
leading up to it, a more detailed reference should be made to 
some of these earlier schemes of consolidating the steel and 
coke businesses, and selling them to outsiders. This will serve 
to correct the prevalent idea that the sale which was finally 
made to Mr. J. Pierpont Morgan for the United States Steel 
Corporation was due entirely to commercial conditions, and not 
to any desire on the part of the Carnegie people to be rid of 
their property. • 

Early in January, 1899 — to be specific, on Thursday, the 
5th of that month — a meeting was held at the house of An- 
drew Carnegie in New York, attended by Messrs. Hy. Phipps, 
Frick, Schwab, Lovejoy, Peacock, and Lauder, for the discus- 
sion of two questions. The first was the price that should be 
named for the properties of the Carnegie Steel Company and 



300 THE ZENITH OF PROSPERITY 

the H. C. Frick Coke Company in response to certain overtures 
to purchase which had been made by a syndicate of New York 
and Chicago capitalists. The second question was whether the 
two companies should be consolidated in case of a failure to 
sell them, and on what terms. Both matters were carefully 
considered; and a decision to sell having been reached, the 
price of ^250,000,000 was fixed upon for the steel company's 
stock, " carrying with it all that is on its books," including the 
shares in the coke company. Payment was to be made one- 
half in cash and one-half in fifty-year five-per-cent. gold bonds. 

When these terms were laid before the syndicate they were 
rejected. While the members did not say so, they had evi- 
dently expected to make a partial payment in stock. 

A consolidation of the coke and steel business was then 
decided upon; and on January 14th Andrew Carnegie wrote his 
wishes to his cousin, George Lauder, as follows : 

"Mr. Rodgers, Standard Oil and Federal, said truly, 'Too 
big a dog to wag so small a tail.' Now H. C. F. and I talked 
over the matter. He will proceed to get plan, new charter, 
bonds, etc., as proposed. 

I wish you and Peacock and Lawrence, Clemson, Lovejoy, 
Gayley, etc., to decide whether you wish to buy the other 
Frick Coke Company Stocks at $35,000,000.00, which Frick 
now wants ; or prefer to let things stand as they are with the 
present fixed rate on Coke. 

The Frick Company price was $30,000,000.00, if $75,000,- 
000.00 Mortgage Bonds only made by C. S. Co., and you may 
prefer to do this, or might make the Mortgage $100,000,000.00, 
and only issue $75,000,000.00 now, and provide only the other 
issue for new property to be acquired, which would be the same 
thing practically as the $75,000,000.00 Mortgage. 

I am just as willing to keep my Frick Company Stock as to 
sell it to C. S. Co., and T suppose H. C. F. is. He can make 
it pay us more than the interest on the $35,000,000.00. 

You should consult all the Managers, including Singer, and 
let each state frankly his preference. Also ask Schwab if he 
has not gone ; if he has, I will see him here. 

It is a matter for all of you to decide, not for me. As I 
told you, C. S. Co. paying in Bonds makes it easy payments — 



CARNEGIE'S FORECAST OF PROFITS 301 

no cash — which is different from heavy yearly payments to 
make. Personally am glad to have this year to ourselves to 
show what we can do. If we wish to sell out, believe me, we 
can do so ourselves for more than $250,000,000.00." 

The reference to the proposed purchase of " the other Frick 
Coke Company Stocks at $35,000,000" is misleading. The 
price was to include all the stock of the coke company, as is 
shown by the Frick plan to which Mr. Carnegie refers. The 
clause relating to this reads : 

"The [projected] Carnegie Company Limited shall purchase 
all the property and business of the H. C. Frick Coke Com- 
pany, the Youghiogheny Northern Railway Co., Youghiogheny 
Water Co., Mt. Pleasant Water Co., Trotter Water Co. and the 
Union Supply Co. Ltd. subject to all their debts, obligations 
and engagements, or all of the Capital Stock of said Companies 
as shall in the consummation of the general purpose of this 
agreement be subsequently deemed most desirable by the Com- 
mittee hereinafter designated, for the sum of Thirty-five million 
dollars ($35,000,000) to be paid as hereinafter stated." 

In other words the entire business of the Frick Company 
and all its dependencies was offered at $35,000,000. This is 
exactly half the price paid for it a year later in settlement of 
the famous litigation. 

Mr. Frick's plan, thus referred to, of a company with a 
capital of $60,000,000 and a bond issue of $100,000,000, was 
not acceptable to Mr. Carnegie, who drew up a prospectus in 
substitution of it, and sent it with the following letter to his 
colleagues in Pittsburg. The phraseology of these documents 
is not very clear; but in the prospectus the retirement of Mr. 
Frick is distinctly provided for : 

"WE (THE CARNEGIE STEEL COMPANY, LIM- 
ITED, and the H. C. FRICK COKE COMPANY) [shall] 
make this year, under the lowest prices on record, say close to 
$15,000,000.00. 

We had only six months of Carrie Blast P'urnaces; not six 
months work of the big new Blooming Mill ; no Armor deliver- 



302 THE ZENITH OF PROSPERITY 

ies, except for three months; a loss of nearly ^1,000,000.00 
profit. 

Had these been running as now our net would hav^e been 
beyond $ 1 5 ,000,000. 00. 

For i8gg : 

We, with half product, sold 1,200,000 tons, 
orders on our books, at higher prices of at least 
^ 1. 00 deliveries $1,200,000.00 

We have of Armor — going to work for years 
ahead — another 1,000,000.00 

Carrie Blast Furnaces ; the Blooming Mill all 
he year, another 500,000.00 

If we get $1.00 more pull on the remaining 
1,200,000 tons 1,200,000.00 



$3,900,000.00 



Our increased product of Furnaces and Mills 
give us a big increase, but there is a gain of , . . .$4,000,000.00 

Which might easily be $5,000,000.00. 

Frick Coke is now making at the rate of a 
$1,000,000.00 more per year; even better pros- 
pects 1,000,000.00 



$5,000,000.00 

The Light Rail Mill begins say July ist; our new Mines 
this year will increase profits there; our big new Universal 
Mill goes into operation say May ist. 

Mr. Fricks estimate of $15,000,000.00 

Frick and Superior Mines over 5,000,000.00 



Net for 1 899 $20,000,000.00 

Just as likely to be above as below, I think more so, but 
say $20,000,000.00. 

In igoo : 

We had the big Plate Mill; Steel Car Shops; new Axle 
Plant; Car Wheel Foundry; all arranged for — came in early 
in 1899; — also two new Blast Furnaces at Carrie. 

For 1900, therefore, present conditions are good for $25,- 
000,000.00. These conditions are very low. Prices liable to 
advance $2.00 to $5.00 per ton. 



$37600,000 A YEAR 303 

The first would give us $ 5,900,000.00 more, 30,000,000.00 
The second 12,500,000.00 more, 37,500,000.00 

I am certain that in two years hence we shall be on the 
basis of $25,000,000.00 net yearly, even at low prices. 

We have to supply the world — note last week's British 
advices — less Ore this year and last from foreign points ; great 
scarcity; prices wild; coke put to 15/6 [fifteen shillings and 
sixpence] at Works, best grade; bad to get 2X that; near $3.75 
per ton and scarce. Impossible to increase supply of either 
Coke or Ore. 

Since we reach Atlantic ports at $1.00 per ton, we have 
the trade of the world. 

I favor holding on for two or three years ; no question but 
we can sell our property at $400,000,000.00. 

200,000,000 Bonds @ 5;^ = $10,000,000.00 

200,000,000 Stock @ 6^ = 12,000,000.00 



$22,000,000.00 
Surplus 3,000,000.00 

We shall beat this — why then not wait. If you wish to sell 
now then here is the plan. A. C." 

(PROSPECTUS) 

THE CARNEGIE STEEL COMPANY, LIMITED, and 
the H. C. FRICK COKE COMPANY. 

In pursuance of a decision of long standing, the four princi- 
pal owners of The Carnegie Steel Company, Limited, and the 
H. C. Frick Coke Company (M]\I. Carnegie, Phipps, Frick and 
Lauder) now retire from active business. To enable them to 
do so, and with the approval of all the younger Partners, the 
partnership has been changed to a corporation — Capital $300,- 
000,000.00. 

One half $150,000,000.00 Gold Mortgage Bonds; 

Preferred Stock, 6%. . . .75,000,000.00 
Common Stock, 75,000,000.00 

All the Bonds and Preferred Stock will be taken payment 
by the four outgoing Partners. 

Part of the Common Stock will be held by the present 
younger Partners; part is now offered to the public. 

Applications from Pittsburg and Western Pennsylvania, 



304 THE ZENITH OF PROSPERITY 

especially in Manufacturers of Iron and Steel, will be given 
preference, the desire being to enlist as many experienced busi- 
ness men at home as possible. 

All the present Partners agree to continue in the service 
for Five (5) years. MM. Carnegie, Phipps, Frick and Lauder 
also agree to remain for that period in their present positions 
as Consulting Partners. 

The Partners have agreed to make good any deficiency in 
the Net Earnings, should such occur during said five years, in 
the amount necessary to pay interest on Bonds and upon Pre- 
ferred Stock, and 6% upon Common Stock. 

To meet this liability there has been deposited with .... 

. . Trust Company, $20,000,000.00 of Bonds, 

contributed pro rata by the Partners. 

The present earnings of the Companies exceed the sum 
required for the payment stated and leaves a satisfactory sur- 
plus for contingencies. Additional Works now in progress, 
which the demand of the ever growing business required, will 
add to the earnings. The property of the new Company em- 
braces all the property of the two former Companies ; every- 
thing is included — real estate, railroads, coke lands (38,000 
acres unmined), mills, furnaces, houses, offices, water rights, 
mines, and everything of every description. 

The debts of the Company, including all Mortgage Bonds, 
etc., are more than covered by the quick assets — the Stock of 
Material, and the Bills Receivable, and the Cash on Hand. 

The Company starts with Working Capital. 

(Signatures) 

This prospectus is true ; nothing kept back. 

These different plans of consolidation and reorganization 
were still under consideration when, towards the end of March, 
overtures were made by ex-Judge W. H. Moore of Chicago for 
the purchase of the Carnegie- Frick properties, with the view of 
combining them. This time an effort was made to get a price 
on Andrew Carnegie's individual holdings of stock in the two 
companies, carrying as they did control ; but, for the sake of 
appearances, Mr. Carnegie refused to deal with outside parties, 
and stipulated that the negotiations should be conducted in the 
names of his principal partners, Phipps and Frick. Accord- 
ingly these gentlemen joined the syndicate, with the under- 



THE MOORE OPTION 305 

standing that Moore and his^friends should finance the entire 
scheme. 

Carnegie demanded a million dollars for a ninety days' op- 
tion on his entire interests at a price of $157,950,000; and he 
afterwards raised this bonus to $1,170,000. The increase was 
met by Messrs. Phipps and Frick each contributing $85,000, 
Carnegie agreeing to return these sums to them later. The 
other members of the steel and coke companies required no 
bonus for an option on their shares except the nominal sum of 
one dollar. These agreements were signed on April 24th. 

If the sale had been consummated it would have been on 
the basis of $250,000,000 "for the entire ownership of first 
party [Andrew Carnegie] and associate owners and interests in 
all the properties and assets of The Carnegie Steel Co. Ltd., 
except its holdings in the stock of the H. C. Frick Coke Co., 
and allied interests, namely: about thirty (30) per cent, of the 
whole of the said H. C. Frick Coke Co., in which thirty per 
cent, in said H. C. Frick Coke Company interests the said 
second parties [H. C. Frick and Henry Phipps, Jr.] may take 
first party's interest on the basis of Seventy millions of dollars 
($70,000,000) for the whole of the said H. C. Frick Coke Co. 
properties and allied interests." And "as to the first party's 
individual holdings of stock in the H. C. Frick Coke Co. and 
allied interests, this shall be upon the basis of Seventy millions 
of dollars for the entire property and assets of the H. C. Frick 
Coke Co. of which stock the holdings of the said first party is 
about twenty-five (25) per cent, of the whole." 

To quote still further from the original option, "the first 
party agrees to take as part payment for his interests as above 
one hundred millions of dollars ($100,000,000) in five per cent, 
fifty year, gold bonds, to be executed by such individual cor- 
poration or limited partnership association, as may be desig- 
nated by the second parties, or their assigns, which bonds shall 
be secured by a mortgage upon all the real estate of the Carne- 
gie Steel Co. Ltd. and to be a first lien thereon, except so far 
20 



3o6 THE ZENITH OF PROSPERITY 

as the same shall be now encumbered, and which shall cover all 
of the stocks, interests and securities covered by this option." 
... " The remainder of the consideration for the sale of the 
interests hereby optioned is to be in cash." 

In this way Carnegie would have been so secured that he 
would virtually have had a first mortgage on all the partnership 
assets, thus gaining a preference over all his partners. 

An instrument of a like tenor and purport was signed by 
other members of the Carnegie-Frick companies, without any 
forfeitable bonus. 

At the time this option was bought the money market was 
in such condition that no difficulty was anticipated by Judge 
Moore in raising the necessary funds to carry out his plans, 
huge as these were. He represented that he would have the 
co-operation of the National City and the First National Banks 
of New York. The death of Roswell P. Flower, however, and 
the forced liquidation of the many industrial securities that he 
had been supporting, brought on a panic that was as disastrous 
as it was unexpected. Occupied in protecting existing obliga- 
tions, bankers and capitalists had little disposition to engage 
in fresh ventures ; and realizing the impossibility of safely 
launching a great enterprise in such troubled waters, Messrs. 
Frick and Phipps went to Scotland to try to get an extension of 
their option. At Skibo Castle Mr. Carnegie refused to extend 
the option, and the negotiations came to an abrupt end. 

An interesting document was drawn up at this time which 
is worth including here, presenting as it does at a glance the 
imposing magnitude of the business whose growth we have 
traced from the little Kloman forge in the basement at Girty's 
Run. It is the draft of a prospectus prepared by the Moore 
Syndicate, but never published. It marks the zenith of the 
Carnegie Steel Company's prosperity. Supplementing it is a 
letter from Mr. C. M. Schwab, of considerable interest. 



THE MOORE PROSPECTUS 307 



(PROSPECTUS) 

A limited amount of the stock of the "CARNEGIE 
STEEL COMPANY" is now offered to the public, on the 
following basis : 

The corporation which it is planned to form with the name 
"Carnegie Steel Company," will have, through a charter to be 
obtained under the laws of Pennsylvania, appropriate powers for 
acquiring, producing, manufacturing and dealing in steel, iron, 
ore, coal and coke, and all things made of steel or iron, with all 
other powers deemed convenient, and will have an authorized 
capital of two hundred and fifty million dollars (^250,000,000), 
divided into two million five hundred thousand (2,500,000) 
shares of the par value of one hundred dollars ($100) each. 

Each subscriber will agree to take and pay for the number 
of shares for which he may subscribe, or such smaller propor- 
tionate number as may be allotted to him in the event of over- 
subscription, of the full-paid stock. 

The price is to be one hundred dollars (^100) in cash for 
each share of stock, and is to be paid into such depository as 
may be designated by the Managers in control of the subscrip- 
tion lists, within ten days after notice calling for such payment 
shall be delivered or mailed to the subscriber ; but ten dollars 
out of every one hundred dollars of subscription may be made 
payable immediately on allotment, if so stated in the notice 
thereof. If the stock certificates cannot be delivered when 
payments are completed, receipts will be issued calling for the 
stock when ready. 

The corporation is to be vested with fifteen million dollars 
($15,000,000) in cash and also with the cash and other avail- 
able assets of The Carnegie Steel Company, Limited, and the 
H. C. Frick Coke Company, and, subject to a Bonded Debt of 
one hundred million dollars ($100,000,000) in 50 year 5^^' Gold 
Bonds, with the properties of The Carnegie Steel Company, 
Limited, and the H. C. Frick Coke Company, which include 
the following : 

The Edgar Thomson Works, at Bessemer, Pa., including : 
Edgar Thomson Blast Furnaces, 
Edgar Thomson Foundry, 
Edgar Thomson Steel Works. 

The Duquesne Works, at Duquesne, Pa., including: 
Duquesne Blast P'urnace, 
Duquesne Steel Works. 



3o8 THE ZENITH OF PROSPERITY 

The Homestead Steel Works, at Munhall, Pa., including: 
Bessemer Steel Department, 
Open Hearth Steel Department, 
Finishing Mills, 
Armor Plate Department. 
The Carrie Blast Furnaces, at Rankin, Pa. 
The Lucy Blast Furnaces, in Pittsburg, Pa. 
The Keystone Bridge Works, in Pittsburg, Pa. 
The Upper Union Mills, in Pittsburg, Pa. 
The Lower Union Mills, in Pittsburg, Pa. 
The H. C. Frick Coke Company's Coal and Coke properties 
in Westmoreland and Fayette Counties, Pa., including: 
About 40,000 acres of unmined coal, 
20,000 acres of surface lands, 
1 1,000 coke ovens; 
2,500 railroad cars, 
3,500 dwellings. 
The Larimer Coke Works, at Larimer, Pa. 
The Youghiogheny Coke Works, at Douglas, Pa. 
All the capital stock of the following Companies : 
The Union Railroad Company, 
The Slackwater Railroad Company, 
The Youghiogheny Northern Railway Company, 
The Carnegie Natural Gas Company, 
The Youghiogheny Water Company, 
The Mount Pleasant Water Company, 
The Trotter Water Company, 
The Pittsburg and Conneaut Dock Company. 
Over one-half the capital stock of the Pittsburg, Bessemer 
and Lake Erie Railroad Company. 

43.6 per cent, of the capital stock of the Pennsylvania and 
Lake Erie Dock Company. 

One-fourth of the capital stock of the New York, Pennsyl- 
vania and Ohio Dock Company. 

Five-sixths of the capital stock of the Oliver Iron Mining 
Company, owning : 

All the stock of the Metropoiitan Iron and Land Company, 

All the stock of the Pioneer Iron Company, 

Over 6^ per cent, of the stock of the Lake Superior Iron 

Company, 
Over 98 per cent, of the stock of the Security Land and 

Exploration Company, 
Other ore properties in negotiation which will be included 
if acquired. 



AN IMPRESSIVE DOCUMENT 309 

One-half of the capital stock of the Pewabic Company. 

Three-fourths of the capital stock of the Pittsburg Litne- 
stone Company, Limited. 

Other interests in Ore Mines, Transportation Companies, 
Dock Companies, Valuable Patents, and Companies owning 
Patents, etc. 

These P'urnaces, Steel Works, Coke Works, and other prop- 
erties are in full operation, their latest complete months' prod- 
ucts being as follows : 

BLAST FURNACES. 

Product — Gross Tons. 

Names. Stacks. Mar., iSgg. Apr., 1899. 

Edgar Thomson Furnaces 9 90,585 88,937 

Duquesne Furnaces 4 70,261 63,012 

Carrie Furnaces 2 18,935 19, 447 

Lucy Furnaces 2 6,03 1 9, 100 

Total 17 185.812 180,496 

STEEL WORKS. 

Product — Gross Tons. 

Names. Mar., 1899. Apr., iSgg. 
Bessemer Steel — 

Edgar Thomson Steel Works 66,427 62,381 

Duquesne Steel Works 53.189 48,849 

Homestead Steel Works 31.282 30,219 



Total 150,898 14^.449 

Open Hearth Steel — 
Homestead Steel Works 90,088 



Total Steel Ingots 240,986 

ROLLING MILLS. 

Product — Gross Tons. 

Names. Kind. Mar., 1899. Apr., 1899. 

Edgar Thomson Steel Works.. Rails 179.256 159.344 

Duquesne Steel Works Billets 29,315 29,223 

do Sheet Bars 14.556 11,478 

do Splice Bars 4.207 3.409 

Homestead Steel Works Blooms and Billets. 95,635 82,977 

do Structural 22,043 22,179 

do Plates 8,651 8,818 

Upper Union Mills Structural 12,106 11,028 

do Plates 8,455 7,466 

Lower Union Mills Structural 4,374 3,947 

do Plates 3,543 3.429 



3IO THE ZENITH OF PROSPERITY 



COKE WORKS. 

Shipments — Net Tons. 

Names. Mar,, 1899. Apr., 1899. 

H. C. Frick Coke Company 506,870 477,640 

Larimer Coke Works 5,030 5,090 

Youghiogheny Coke Works 2,860 1,850 



Total Coke 514,7^0 484,580 

OTHER DEPARTMENTS. 

Product — Gross Tons. 

Kind. Mar,, iSgg. Apr., 1899. 

Edgar Thomson Foundry Castings 5,465 5,439 

Duquesne Steel Works Finished Splices 4, 114 3,47o 

Homestead Steel Works Armor 446 621 

do Rivets and Bolts 125 105 

do Castings 152 200 

do Fitted Work 1,958 1,928 

do Columns 635 411 

Upper Union Mills Rivets and Bolts 21 20 

do Fitted Work 346 713 

Lower Union Mills Axles 2,629 1,664 

do Forgings 108 103 

do Spring Steel 638 731 

Keystone Bridge Works Bridge Work 3,394 2,933 

do Castings 274 348 

do Rivets 116 143 

As has been the fixed policy of the " Carnegie " Associa- 
tions during the past twenty years, Improvements, Extensions 
and Additions are constantly being made. Blowing Engines 
are being added at Edgar Thomson, Duquesne and Carrie Blast 
Furnaces, which will increase the product of Pig Iron 175,000 
tons per annum. Ten Open Hearth Furnaces, a 30 inch Slab- 
bing Mill, a 128 inch Plate Mill and a 42 inch Universal Plate 
Mill are building at Homestead Steel Works, and will be com- 
pleted in June and July next, increasing the product of Steel 
Ingots 350,000 tons per annum, and of Plates 300,000 tons per 
annum. A Steel Axle Works, at Howard, near the Homestead 
Steel Works, will be completed by November next, with a 
capacity of 100,000 tons of Car Axles per annum. Many other 
minor Improvements are under way, all with a view to increas- 
ing product, decreasing cost or expediting shipment. 

The present output of these Works is at the annual rate of 
2,200,000 gross tons of Pig Iron, Spiegeleisen and Ferro-man- 



POSSIBLE PROFITS $4,32^,922 A MONTH 311 

ganese; and 2,800,000 gross tons of Steel Ingots, with ade- 
quate finishing capacity. 

The Improvements now approaching completion will increase 
the output to the annual rate of 2,375,000 gross tons of Pig 
Iron, Spicgeleisen and Ferro-manganese ; and 3,1 50,000 gross 
tons of Steel Ingots, with sufficient finishing capacity to turn 
this Steel into Rails, Billets, Structural Shapes, Plates, Railroad 
P'orgings and other Merchantable forms. 

The Net Earnings of the business which will be transferred 
to the " Carnegie Steel Company " were 

For March, 1899 ^1,652,038.75 

For April, 1899 1,888,227.72 

Owing to the magnitude of the business, and the immense 
tonnage of the various products, it is necessary that long time 
contracts be made, far in advance of the time of delivery. The 
result is that present shipments are at prices far below present 
rates, the rates at which contracts are being made for future 
delivery. Had current prices been obtained for the shipments 
during these two months, the Net Earnings would have been 

For March, 1899. ^3,182,574.95 

For April, 1899. 4,325,922.78 

and with present market prices and the increased product result- 
ing from the Improvements named, an average single month's 
Net Profit will largely exceed the above; justifying the expec- 
tation that the " Carnegie Steel Company " will pay annually, 
under almost any condition of business : 

5^ on ^100,000,000 Bonds ^5,000,000.00 

And at least 

6% on ^250,000,000 Stock 15,000,000.00 



$20,000,000.00 



and leave an ample surplus for extra Dividends, as well as for 
other Improvements and Additions which will still further in- 
crease the Net Earnings and the rate of Dividends on the Stock, 
besides providing a fund for retiring the Bonds at maturity. 
The Carnegie Steel Company has been, is, and will be in an 
absolutely independent position, owning the sources of supply : 
Ore, Coal, Coke, Limestone and Natural Gas ; the Transporta- 



312 THE ZENITH OF PROSPERITY 

tion Lines for bringing the raw materials to the Works; the 
Docks for handling Ore; the Coke Works, Blast Furnaces, 
Steel Works and Finishing Mills, each advancing the product 
to a higher grade, until it is ready for the markets of the World, 
with every intermediate profit saved for the benefit of its Stock- 
holders. 

The efficient Organization which had brought the " Carne- 
gie " Associations to their present unassailable position will 
remain intact. Nearly all of the former Shareholders in The 
Carnegie Steel Company, Limited, and the H. C. Frick Coke 
Company, all of whom were actively engaged in the business, 
have taken Stock in the " Carnegie Steel Company," and many 
other Officers and Employes, Superintendents, Foremen, Heads 
of Departments, Sales Agents, Workmen and Clerks, have sub- 
scribed for Stock in the new Company, demonstrating their 
faith in its future and ensuring the same bold yet conservative 
management which has rendered possible such an aggregation 
of capital as this ; making large profits, yet earning them ; con- 
trolling the market, yet never abusing its power ; encouraging 
the wider use of Steel by the reductions made in its Cost, yet 
paying the highest wages in the World. Such has been the 
past, such is the present and such will be the future of the Car- 
negie Steel Company. 

Pittsburg, Pa., May 15th, 1899. 
My dear Mr. Frick: 

You ask me to give my views as to the probable future 
earnings of the Carnegie Interests, and as to the proposed reor- 
ganization on a basis of ^100,000,000 Bonds — $250,000,000 
preferred stock and $275,000,000 common stock. 

Permit me to say that commencing in 1879 as Engineer, 
constructing the works, ten years as General Superintendent of 
our principal works and over two years as President, I feel that 
I know the properties and their possibilities as well, or better 
than any one in or out of the concern. 

While we have been highly successful in the past, as every 
one knows, I believe we are only now getting in shape to be 
truly successful and truly profitable. Our April profit and loss 
sheet shows earnings slightly over $1,500,000.00 with rails 
netting us only $17.50 and billets $16.00. Lowest prices we 
ever had on an average were $16.50 for rails and $14.50 for 
billets, so you see we have reaped very little of the advantages 
of increased prices. With prices anywhere near to-day's sell- 
ing prices we would easily make over $3,000,000.00 per month, 



THE LAST BALANCE SHEET 



313 



QB OAMIEOIE STES. 0(»FKUff* UXXXn. 
OfflM «f S«MretMrr. 

aALASOE oast, UARQB 1, 1900. 



ASSETS. 
CASHi- Trwoovy* 

SalM Ag«aalM( 
SILLS R£CEITABLE» 
MQRTGAGEii RSCEITABLEf E^^TM* 
&CCOUBTS R£C£IVABIXi Otirr«iit» 
SflouriUM 

STOCKS! FiniBhMl Prodoot, 
!iSftt«rL*l« for Cm, 
Qf at Uln Porta* 
Or* «t lUnM* 

AVAILABLE ASSETS, 
WJRKS and PROPERTIES i- 

Edgar Thoraaoa Works 1 

Duqueone St««l Work0i 

Duqussne Vuma«9«t 

Homeetoad Steal Woito, 

Carrla Pumaoaa* 

Hoimrd Axle Woi4a, 

L«oy AimacMi 

Ksystona Bridfe nork*i 

^Wvt Union ^Ist 

Lower IMiaa UiUa. 

Larioar Coka WorlUi 

Youghioghany Ooka Watte* 

Oitjr Fara Lotfl, 

terona Land» 

Libaarty Pam, 

Olttar Land» 

PeifT^it Laodi 
1^00 CIPRO VEiSatSl- 

Edgar 'Thotteoa Pariw«ae» 

Cd^ar T&OQSOa Stael Wks. • 

Ed^q^ I^OEWOa youadry* 

Doqufiane PttfnMM* 

Doqueona Stael ^>rk«> 

HOBteataad Stael fforka* 

Carrie Purnaees* 

Hotord Axle Wbrica» 

Lucy Pumaces, 

Keyatone Bridge v/orka* 

Upper Union Mtllo, 

Lower Union Milla, 
8T00KS A BOSDS, Izrrevteaata* 
ONOIYIDED CAPITAL, 
DUZ PROU PARTHEra, 

TOTAL ASSETS, 
LIi\flILITlE3. 
MORTQAOES PATABLEi- 

Edgar Thomson Vtorka, 

Duqueana Steal Works, 

Doqueane Pomaoes, 

Horasatead Steel Worka, 

Oarrie Pumaoaa, 

Koftrard Axle ?/ork>* 

Xeyatone Bridge Worka, 

Liberty Parm, 

Oliver Laad, 
BILLS PAlABLZi Ourraat, 
Stawart, 
Bomtraeger, 
AOCOORTS PAtABLEl Ourra^, 

Ore, 
SPECIAL DEPOSITS, 

LIABILnms PATABLE, 
SPBOIAL PUHOSl- 

Ooatingant Pund,_ 

Oootingant * Special, 

Beliniag Pimd, 

Coal EztinguiahsMnt Pund, 

CAPITAL, 



10,429,594.67 

2,333,406.35 

5,626,211.91 

-16.644.201.34 

1,079.583.69 

nr ,476.87 

1,2S1,869.99 

713,160.11 

1,000.000,00 

700,000.00 

200,000,00 

160,000.00 

960,664.50 

40,000.00 

22S,000Uto 

310,315.81 

^bi2a 

50,48^J.S 

31.441.69 

10.60 

13,324.48 

804.659.24 

240,666.98 

204,070. 5« 

102,542.90 

3,415.57 

1.66S.18 

6,587.12 



209,946.00 
995,000.00 
200,000.00 
103,250.00 
600,000.00 
275,275.85 
50,000.00 
150,000.00 
lS3,Q9Q,Off 



4,360,174 
375,000.00 
27\.V>3.?g 

2,469,650.44 

2y>i^3<?^2; 



557,143.50 
711,310.00 
211,328.85 

f6, 579, 914. 19 

25,000,000.00 



l.S87,48f.M 
l«.t88.4« 



It, 881, 884.00 

2,768,203.92 
7,087,964.76 
1,962.212.81 



42.896,518.74 



988, 797. S» 



1,882.023,59 

7.174,804.02 

239.849.44 

16,899.208.80 



,a.gA;i.9Wtgj 

57,467,732.90 



14.940.408.80 58,295,716.59 

77,710.71 
8|?aPtgAgi88 5,?ff3.?52,9^ 

101,416,302.48 



2,734,470.88 



8,006,698.29 

2,700,780.98 

14,227,126.04 



2r«496, 104.80 
4,113,667.38 



81.579.914.19 101.416.802.48 



Photographic copy of last balance sheet before consolidation. 



314 THE ZENITH OF PROSPERITY 

and then our new works to be started in two months will, I 
estimate on present prices, bring us an additional profit of 
^600,000.00 per month or total of $3,600,000.00 per month. 

As to the future even on low prices, I am most sanguine. 
I know positively that England cannot produce pig iron at 
actual cost for less than $1 1. 50 per ton, even allowing no profit 
on raw materials, and cannot put pig iron into a rail with their 
most efficient works for less than $7.50 per ton. This would 
make rails at net cost to them of $19.00. We can sell at this 
price and ship abroad so as to net us $16.00 at works for for- 
eign business, nearly as good as home business has been. 
What is true of rails is equally true of other steel products. 
As a result of this we are going to control the steel business 
of the world. 

You know we can make rails for less than $12.00 per ton, 
leaving a nice margin on foreign business. Besides this, for- 
eign costs are going to increase year by year because they have 
not the raw materials, while ours is going to decrease. The 
result of all this is that we will be able to sell our surplus 
abroad, run our works full all the time and get the best practice 
and costs in this way. 

As to the works, any competitor will tell you that we are 
far ahead of any one, and, if the plans which we have for the 
future, are carried out we will be farther ahead than ever. I 
have no fears for the earnings in the future. I believe they 
will much exceed any estimate we have made, provided, how- 
ever, that the same methods of organization and operation as 
now exist, are fully carried out in the future. 

It must not be run as other concerns are run, but as it is 
now conducted. This is most important. I believe the earn- 
ings will fully justify the capitalization and as a proof of my 
belief in this, I am quite willing to take every dollar I own in 
the stock of the new concern on the basis proposed. 
Very truly yours, 

C. M. Schwab, 

President. 

Mr. H. C. Frick, Chairman, 
Building. 

The third attempt to sell the Carnegie properties to the 
public having thus failed, the partners returned to their 
schemes of consolidation and reorganization. This time Mr. 
Frick and the junior members took up the task; and they made 



ANOTHER SCHEME EAHS 315 

elaborate plans for a new company with a capital of $250,000,- 
000 and no bonds. This company was ** to purchase from the 
Carnegie Steel Co., Ltd., for $195,312,500 all its properties 
real, personal and mixed, excepting its holdings in the stocks 
of the H. C. Frick Coke Co." . . . and "from the H. C. Frick 
Coke Co. and its subsidiary companies named above, for $54,- 
687,500 all their properties, real, personal and mixed; the total 
consideration, $250,000,000, to be paid in instalments as the 
stock subscriptions became due." Provision was made for 
" Andrew Carnegie to loan to each ' Debtor Partner ' an amount 
sufficient to enable him to pay his indebtedness to either sell- 
ing company." "All the stock" was to be "placed in a trust 
for ten years, during which time no stock shall be sold except- 
ing " from one owner to another, or by authorization of a three- 
fourths vote of stock in value and stockholders in number, or 
in the event of death of any member. This plan, representing 
the " unanimous views of every subscriber hereto, after full dis- 
cussions of all suggestions had at meetings held September 
II, 19, and 25," was commended to "the favorable considera- 
tion of the senior members." "We would not favor any plan 
that would contemplate bonding the property," they concluded. 
Ten signatures followed. 

Of course nothing came of it. It is surprising that any- 
thing should have been expected of a plan that did not " con- 
template bonding the property." Andrew Carnegie had placed 
himself on record with sufficient emphasis to leave no doubt in 
any reasonable mind as to the kind of security he wanted. So 
this plan joined the other liquid ideas that the corporate mind 
had secreted during the preceding years. 




CHAPTER XX 

CARNEGIE'S ATTEMPT TO DEPOSE FRICK 

IN chemical experiments it often happens 
that before the process of crystalHzation 
can be started in a saturated solution, 
a blow must be given to the vessel 
containing it. This was evidently 
the condition of the ideas that had 
long been floating in and out of 
the minds of the partners concern- 
ing consolidation and reorganization : it required the shock of a 
rupture between Carnegie and Frick to jar the fluid schemes 
into solidity. And in conformity with the run of forty years' 
uninterrupted Carnegie luck, this shock, which threatened at 
first to have a shattering effect, further welded the corporate 
interests, doubled the already enormous wealth of the principal 
partners, and made the little ones all millionaires. 

It was not inconsistent with its previous history that the 
Carnegie enterprise should reach its final and perfected form 
through strife. Born of a quarrel, it throve on contention. 
Each stage of its growth was marked by some dispute ; and 
that it ever became a Carnegie concern, rather than a Miller, 
Coleman, or a Shinn creation, was solely due to the consolidat- 
ing effect of timely "ejectures," as Carnegie euphemistically 
named the expulsion of partners. 

The proposed "ejecture" of Frick, however, was not the 
simple matter it had been in previous cases. The man whose 
stubborn nature had passed through the annealing process a 
dozen times was not the one to accept an arbitrary dismissal ; 

and the fight he now made was as notable, and was as keenly 

316 



INTOLERANCE OF RIVALS 317 

watched by the country, as was the contest with labor that 
had given him the real headship of the great organization he 
managed. 

In tracing the causes of this attempted "ejecture," the one 
just named was probably the first. Since the earliest days it 
had been the basis of Andrew Carnegie's policy to tolerate no 
rival. In every previous case the growing prominence of part- 
ners had been checked before it had become dangerous. The 
genius of Kloman, the strong personality of Coleman, the mas- 
terful competency of Shinn, each in turn was forced to yield to 
the superior money power of Carnegie, and to find, as one of 
the old partners graphically puts it, *' a top fence-rail of its own 
to crow from." Phipps, willing to stand in the shadow and in- 
different even to the honors that were peculiarly his, inspired 
neither jealousy nor fear. Lauder was only Carnegie's echo. 
Singer conscientiously attended the Board meetings, and his 
ambition was more than satisfied with the prerogative of mak- 
ing the motion for dividends. Stewart was a good-natured and 
most useful treasurer, who could always get money on a pinch. 
Abbot, publicly greeted by Carnegie as " that young Napoleon 
of business " one day, was exiled almost the next. The busi- 
ness genius of T. M. Carnegie might have made him dangerous, 
but he died young. Of them all Frick, young, forceful, self- 
contained, tenacious, ambitious, and rich, was more than a rival ; 
he was an equal from the start. And when he emerged from 
the Homestead contest with the admiration of the country, 
while Carnegie had only mystified the people, his leadership 
was everywhere acknowledged. 

The first effort to diminish Prick's prominence was made 
in 1895. At this time he was trying to unify the coke-produc- 
ing interests in one great company. He had almost succeeded; 
but there remained one third-rate operator who refused to join 
the combination on any reasonable terms. The character of 
this person was such that he was hardly tolerated amongst hon- 
est men, except when they met him at church ; and Frick had 



3i8 ATTEMPT TO DEPOSE PRICK 

ceased to seek his co-operation. Then Carnegie secretly took 
up the negotiation, and arranged a scheme by which this in- 
dividual, with his twelve hundred ovens, should assume the 
headship of the coke combination, while Frick with his ten 
thousand ovens, should modestly drop into a subordinate place. 
The project died with apoplectic suddenness as soon as it was 
proposed to the man most interested; and Carnegie acquired a 
new view of his partner. Thereupon the office of president of 
the Carnegie Steel Company was created, and Mr. Leishman 
was put in with that title, Mr. Frick remaining chairman as 
before. 

To the outside world it looked as if Mr. Frick had been 
deposed from his headship by this proceeding ; but every clerk 
in the office and every man in the mills knew that this was not 
so. The power that ruled every department, from the highest 
to the lowest, was Frick ; and the president had merely such 
outside prestige as the chairman did not value. 

The cause of disagreement between Carnegie and Frick that 
had most influence in producing the final rupture was the 
divergent views they held concerning the price the steel com- 
pany should pay for coke. While Carnegie controlled a major- 
ity of the coke company's stock, through his personal holdings 
and those of the firm, there were a few outside shareholders 
whose interest it was that the steel company should pay the full 
market price for its fuel ; and to protect these minority stock- 
holders, Frick always made as good a contract as he could with 
the steel company. Carnegie, on the other hand, wishful to 
keep ail costs down, tried to obtain specially low rates on coke 
for his firm. This matter eventually brought about the final 
rupture. 

Before this happened, however, another source of ill feeling 
grew out of the failure of the Moore Syndicate to complete the 
purchase of Carnegie's interest at a price of $157,950,000. 
For unfortunately the news of this option had been made pub- 
lic ; and the newspapers of England and America overwhelmed 



ABSURD NOTORIETY 



319 







■% 



PUZZLE 



Carnegie with their comments and congratulations, just as 
though the huge transaction had been completed. When, 
through the collapse of the money market, the syndicate found 
itself unable to finance a deal calling for a hundred millions in 
cash in ninety days, Mr. Carnegie's chagrin was all the greater 
because of the premature applause to which he had been treated. 
And his annoyance was very natural. With excessive zeal his 
friend Stead had rushed a book through the press entitled " Mr. 
Carnegie's Conundrum : ^40,000,- 
000. What shall I do with it.!*" 
and bearing on its title-page the 
famous Carnegie dictum : '' The 
man who dies rich dies dis- 
graced ! " Under the circum- r^ 
stances it was an anticlimax. 
Furthermore, an enterprising 
advertiser of soap or some such 
detergent placarded England, 
where Carnegie was then stay- 
ing, with offers of prizes for the 
best answer to " Mr. Carnegie's 
Conundrum " ; and daily reports 
were published in the newspapers 
of the thousands of answers re- 
ceived. The position in which the millionaire philanthropist 
was thus placed was most undignified. He could not take up a 
paper without seeing in the form of an advertisement some 
idiotic suggestion as to how he ought to spend the forty million 
sterling he had failed to receive. He could not take a walk 
without the same offensive advice gleaming from a hundred 
bill-boards ; and supersensitive as he always was to ridicule, his 
displeasure not unnaturally fell upon the partners whom he 
regarded as primarily responsible for this absurd notoriety. So 
when they came to him for an extension of their all-too-short 
option, he not only refused it, but in contravention of his agree- 




Offensive advice gleaming from 
bill-boards." 



320 



ATTEMPT TO DEPOSE FRICK 



ment with them, kept the $170,000 which they had contrib- 
uted as their share of the $1,170,000 paid him as a bonus for 




Photographic copy of letter from Mr. Carnegie in England to his trustees in Pitts- 
burg. In his own hand are the words : Of course any part paid by my partners I 
shall refund. 



the option. Here is a photographic reproduction of a portion 
of the letter in which he made this agreement. 

The culmination of these animosities was reached in Octo- 



THE ALLEGED COKE CONTRACT 321 

ber, after Mr. Carnegie's retucai from Europe. It came about in 
this wise. 

One day, during the previous spring, Mr. Phipps called on 
Mr. Carnegie in New York and was greeted with great effusion. 
" Harry," said Carnegie, '* Frick has just left; and I've made a 
splendid contract for coke. It is a three years' agreement to 
give us coke at ^1.35 a ton." 

"And if the market price drops below $1.35 ? " queried Mr. 
Phipps. 

Mr. Carnegie was surprised. He had not thought of that. 
A day or two later, when Mr. Phipps called again, he said : 

"Harry, I've fixed that coke matter. We are to have the 
same price as others if it drops below $1.35." 

It afterwards turned out that the way he had " fixed " it was 
that he had told Lauder to notify Schwab that a clause must be 
added to the contract, under which the Carnegie Steel Company 
would pay the same price for coke as any other buyer, provided 
that price was less than $1.35. 

" Is that what Mr. Carnegie demands } " asked Mr. F'rick, 
on receiving the message through Mr. Schwab. 

" It is," replied the latter. 

" Then the arrangement is all off, and must be taken up 
anew." 

This- answer was communicated to Mr. Carnegie; but he 
did not mention the matter to Mr. Frick, although he allowed 
others to give him to understand that he considered the agree- 
ment as amended by himself binding on the coke company. 

During the early summer the price of coke was low, and 
there was no disposition shown by the Carnegies to have the 
alleged contract enforced; but when prices advanced an at- 
tempt was made to settle with the F'rick Company at $1.35 a 
ton. Insisting that the coke company had no contract with the 
steel company. President Lynch had all shipments billed at 
market rates ; and when Mr. Lawrence Phipps, on behalf of the 
steel company, refused to pay more than $1.35 a ton, he was 



322 ATTEMPT TO DEPOSE FRICK 

notified that no further orders would be filled until payment for 
past purchases was made at the rates charged. To remove all 
doubt as to where the coke company stood, a meeting of the 
Board of Directors was held on October 25th, 1899, and the fol- 
lowing resolution was passed : 

" Resolved, That the president be authorized and instructed 
to notify the Carnegie Steel Company, Limited, that the exist- 
ence of any contract is denied and that no claim to settle in 
accordance with the terms of the alleged contract for past, pres- 
ent or future deliveries of coke to the said Carnegie Steel Com- 
pany, Limited, will be recognized or entertained by this Com- 
pany." 

It was at this critical juncture that a disagreement of a more 
personal nature occurred between Messrs. Frick and Carnegie, 
and brought down the tottering fabric of their friendship with 

a crash that wrought the final trans- 
formation of the Carnegie Steel 
Company, alienated lifelong friends, 
gave the public the secret confi- 
dences of the corporation, and Pitts- 
burg a new batch of millionaires. 
It seemed a little thing to produce 
such momentous changes ; but then, 
^-' -'^" it was only Mrs. O'Leary's cow that set the city 
"Set the city of ^f Chicago On fire. 

Chicago on fire." ° 

At the meeting of the Board of Managers 
on December nth, 1899, Mr. Schwab made reference to the con- 
templated purchase by the Carnegie Company of a tract of land 
situated on the Monongahela River belonging to Mr. Frick; and 
he mentioned ''a hitch in the negotiations." This tract had 
been^acquired by Mr, Frick in partial exchange of other land ; and 
Mr. Lawrence Phipps, who was familiar with land values in that 
neighborhood, had valued it at ;^4,ooo an acre. The land was 
wanted by the company ; and Mr. Frick offered it to the firm at 
;^3, 500. As Mr. Schwab remarked at the meeting, " there is 




AN INSINUATION MET 323 

no doubt about our needing this land before long " ; and Mr. 
Frick had shown his habitual foresight in securing it. For 
some reason, however, Mr. Carnegie disapproved of the pur- 
chase after he had sanctioned it; and insinuated that Mr. Frick 
was making a profit on the transaction. This coming to Mr. 
Frick's ears, he withdrew his offer. This was the ''hitch" to 
which Mr. Schwab referred. Later fresh troubles arose ; and 
Mr. Frick sold the land to other parties for half a million dol- 
lars more than he had asked the Carnegie Steel Company. 

The insinuation, with its implications, was indignantly re- 
sented by Mr. Frick. He did not meet the covert attack by a 
return innuendo, but by an open minute spread upon the rec- 
ords of the Carnegie Steel Company. This, dated November 
20th, was as follows : 

In submitting Mr. Moreland's report, I would like to call 
attention especially to low prices we are to receive for rails 
through the greater part of next year — almost ^8.00 per ton 
below the present market price, and very little above what old 
rails for re-melting are selling for. This will seriously affect 
our labor at Edgar Thomson, which is based on the price we 
receive for rails. 

Mr. Carnegie continually referred, while here, to the low 
prices obtained under sliding scale contracts, entirely ignoring 
the fact that he alone was to blame for creating the atmosphere 
in which these sliding scale contracts, and other contracts, were 
made, by insisting last fall, against the almost unanimous pro- 
test of his partners, on selling rails far into the future at ^16.00 
and $17.00 per ton. It was fair for Sales Department to as- 
sume that if those were his views as to the prices which were 
to prevail for rails, they should be well satisfied with the much 
better prices they were themselves obtaining for other products 
under sliding scale contracts they were then making; although, 
it must be said for Mr. Carnegie, that he gave as his reason for 
wanting such low prices for rails, that it was for the purpose of 
breaking up eastern Rail Companies. 

I learn that Mr. Carnegie, while here, stated that I showed 
cowardice in not bringing up question of price of coke as be- 
tween Steel and Coke Companies. It was not my business to 
bring that question up. He is in possession of the Minutes 



324 ATTEMPT TO DEPOSE FRICK 

of the Board of Directors of the Frick Coke Company, giving 
their views of the attempt, on his part, to force them to take 
practically cost for their coke. I will admit that, for the sake 
of harmony, I did personally agree to accept a low price for 
coke ; but on my return from that interview in New York 
(within the next day or two) President Schwab came to me and 
said that Mr. Lauder said the arrangement should provide that, 
in case we sold coke below the price that Mr. Carnegie and I 
had discussed, the Steel Company was to have the benefit of 
such lower price. I then said to Mr. Schwab to let the matter 
rest until Mr. Carnegie came out (he told us he intended to 
come), and we would take up the question of a coke contract. 
He changed his plans, and did not come out. I saw him in 
New York, before he sailed, and told him that Mr. Lauder had 
raised that question, and suggested that he write Mr. Schwab, 
and let Messrs. Schwab and Lynch take up the question of a 
coke contract. Mr. Schwab, I believe, never heard from him 
on the subject, and Mr. Lynch, President of the Frick Coke 
Company, very properly, has been billing the coke, as there was 
no arrangement closed, at a price that is certainly quite fair and 
reasonable as between the two Companies, and at least 20 cents 
per ton below the average price received from their other cus- 
tomers. We have By-Laws, and they should govern. If not, 
why do we have them t It is the business of the Presidents of 
the two Companies to make contracts of all kinds. Mr. Car- 
negie has no authority to make a contract that would bind this 
Company. Neither have I any authority to make any contract 
that would bind the Frick Coke Company ; and, at any rate, 
why should he, whose interest is larger in Steel than it is in 
Coke, insist on fixing the price which the Steel Company 
should pay for their coke.-* The Frick Coke Company has 
always been used as a convenience. The records will show 
that its credit has always been largely used for the Steel Com- 
pany, and is to-day, to the extent of at least ^6,000,000.00. 
The value of our coke properties, for over a year, has been, at 
every opportunity, depreciated by Mr. Carnegie and Mr. Lau- 
der, and I submit that it is not unreasonable that I have con- 
siderable feeling on this subject. He also threatened, I am 
told, while here, that, if low price did not prevail, or something 
was not done, that he would buy 20,000 acres of Washington 
Run coal and build coke ovens. That is to say, he threatened, 
if the minority stockholders would not give their share of the 
coke to the Steel Company, at about cost, he would attempt to 
ruin them. 



THE FINAL BREAK 325 

He also stated, I am told,>vhile here, that he had purchased 
that land from me above Peters Creek ; that he had agreed to 
pay market price, although he had his doubts as to whether I 
had any right, while Chairman of the Board of Managers of the 
Carnegie Steel Company, to make such a purchase. He knows 
how I became interested in that land, because I told him in 
your presence, the other day. Why was he not manly enough 
to say to my face what he said behind my back? He knew he 
had no right to say what he did. Now, before the Steel Com- 
pany becomes the owner of that land, he must apologize for that 
statement. I first became interested in that land, as I told 
you, through trading a lot in Shady Side that I had owned for 
years. The land is six miles away from any land owned by the 
Carnegie Steel Company. Steel Company does not need it 
now, and will not need it for a long time in the future, if at 
all ; but, of course, if they owned it, it might keep another 
large works from being built, or enable Steel Company to go 
into competition with some other large industry. 

Harmony is so essential for the success of any organization 
that I have stood a great many insults from Mr. Carnegie in 
the past, but I will submit to no further insults in the future. 

There are many other matters I might refer to, but I have 
no desire to quarrel with him, or raise trouble in the organiza- 
tion; but, in justice to myself, I could not at this time, say less 
than I have. 

A copy of this was sent in the usual way to Mr. Carnegie 
in New York. He waited in silence to see if the Board of 
Managers would approve the minutes at their next meeting; 
and when they did so he at once came to Pittsburg, called a 
meeting of the members of the Board, and demanded that they 
sign a request to Mr. Frick for his resignation. He said he 
would not use it unless he had to ; but that he wanted to be 
fortified with it.' Armed with this he called upon Mr. Frick, 
whom he found willing to resign in the interests of harmony. 

Accordingly the next day Mr. Frick tendered his resignation 
and it was accepted by the Board. Here are the minutes of the 
meeting : 

"At a meeting of the Board of Managers of The Carnegie 
Steel Company, Limited, held at the General Offices of the 



326 ATTEMPT TO DEPOSE PRICK 

Association, Carnegie Building, Pittsburg, Pa., at 12:30 p.m., 
Tuesday, December 5, 1899, there were present MM. Schwab 
(president), Peacock, Phipps, Morrison, Clemson, Gayley and 
Love joy (secretary) ; also MM. Andrew Carnegie, Henry Phipps, 
George Lauder and W. H. Singer. 

The following communication was read : 

* December 5 th, 1899. 
Gentlemen : 

I beg to present my resignation as a member of your Board. 
Yours very truly, 

H. C. Frick. 

To 

The Board of Managers, 
The Carnegie Steel Co. , Ltd. , 
Pittsburgh, Pa.' 

On motion, (MM. Clemson and Peacock), the resignation 
was accepted, with the sincere thanks of the Board of Mana- 
gers, both as such and as representing the Shareholders ; for 
efficient, zealous and faithful service as a member of this Board 
from January 14, 1889, to the present day; the vote being 
unanimous, and all present concurring." 

The difficult position of the junior partners in this crisis is 
graphically stated in the following extract from a letter written 
by Mr. C. M. Schwab, the day before Mr. Carnegie's arrival in 
Pittsburg : 

Sunday, Dec. 3rd, 1899 

... I just returned from New York this morning. Mr. 
Carnegie is en-route to Pittsburgh to-day, and will be at the 
offices in the morning. Nothing could be done with him look- 
ing towards a reconciliation. He seems most determined. I 
did my best. So did Mr. Phipps. I feel certain he will give 
positive instructions to the Board and Stockholders as to his 
wishes in the matter. I have gone into the matter carefully 
and am advised by disinterested and good authority that, by 
reason of his interest, he can regulate this matter to suit him- 
self — with much trouble no doubt, but he can ultimately do so. 
I believe all the Junior members of the Board and all the Junior 
Partners will do as he directs. Any concerted action would be 



JUNIOR PARTNERS FACE RUIN 327 

ultimately useless, and result^ in their downfall. Am satisfied 
that no action on my part would have any effect in the end. We 
must declare ourselves. Under these circumstances, there is 
nothing left for us to do but obey, although the situation the 
board is thus placed in is most embarrassing. 

No one can read this letter without sympathizing with Mr. 
Schwab. On the one hand Carnegie, the majority stockholder, 
could force him to vote for Prick's expulsion or ruin him if he 
resisted. On the other hand, Schwab's obligations to Frick 
and their friendship for years made his subservience to Carne- 
gie almost impossible. This is undoubtedly what he himself 
felt ; for he had always freely admitted his great obligations to 
Mr. Frick. Indeed, he had frankly attributed his success to 
him. '' If I have anything of value in me," he once wrote, 
Mr. Frick's " method of treatment will bring it out to its 
full extent " ; and he *' regarded with more satisfaction than 
anything else in life — even fortune — the consciousness of hav- 
ing won" Mr. Frick's friendship and regard. It can be well 
imagined that it was with great reluctance that he afterwards 
allowed himself to be forced by Carnegie into active opposi- 
tion to his chief. 

With Mr. Frick's resignation from the chairmanship of the 
Board the dispute seemed ended; Mr. Carnegie returning to 
New York apparently satisfied. A month or so later, however, 
he returned to Pittsburg with an elaborate scheme for the com- 
plete "ejecture" of Mr. Frick. Before describing this, the 
further course of the coke controversy should be outlined. 

When Mr. Carnegie was in Pittsburg in December he 
quietly began to lay his plans for war. His first move was to 
try to win over Mr. John Walker. 

Mr. Walker was one of the minority stockholders of the 
coke company; and as trustee for the minor heirs of his old 
partner Wilson, he had kept a large part of their fortune in the 
Frick Coke Company. He was, therefore, doubly interested in 
the controversy. Mr. W^alker's high commercial standing, his 



328 ATTEMPT TO DEPOSE PRICK 

fine judgment and excellent fighting qualities, made him an ad- 
versary to be conciliated if possible ; and Mr. Carnegie, during 
this visit, sought to detach him from Mr. Frick. 

Some ten years before this, when Mr. Walker was chair- 
man of Carnegie, Phipps & Co., a personal difference had 
arisen between him and Carnegie, and he withdrew from the 
firm. Carnegie now offered him a position on the Board of the 
steel company and an interest in it, in exchange for his hold- 
ings in the coke company. As this involved abandoning his 
friend Frick in a fight which the latter had entered into to safe- 
guard the interest of all minority stockholders, including his 
own and those of the widow and orphans of Carnegie's old boy 
companion — for Wilson was one of The Original Six — Mr. 
Walker declined the offer. He thereby failed to make several 
millions of dollars which would otherwise have been his. 

It afterwards transpired, however, that Mr. Walker had been 
mistaken in supposing that Mr. Carnegie wished to sacrifice 
the interests of all the minority stockholders in the coke com- 
pany. For at this time Mr. Carnegie told Mr. Schwab to quietly 
notify Mr. Walker that if he would withdraw his opposition to 
the coke contract, the matter would be so arranged that he and 
those he represented should receive the same profits from their 
coke investments as they would if the steel company paid full 
price for its fuel. Mr. Schwab, however, did not dare himself 
to make such an offer to a man like Mr. Walker; and he asked 
another member of the Board of Managers to do it. This gen- 
tleman also declined, as did every other member of the Board 
to whom the matter was submitted ; and Mr. Walker lost the 
opportunity of declining the bribe. And if he reads this book 
he will probably learn for the first time of Mr. Carnegie's 
benevolent intentions. 

Failing thus to win Mr. Walker to his side Mr. Carnegie 
promptly included him in the fight, which he now carried right 
into his adversary's camp. 

It will be remembered that the majority — a little more than 



AN AMAZING CONTRACT 329 

half — of the coke company'^ stock belonged to Carnegie and 
the steel company. On the 9th of the following January 
(1900) the usual stockholders' meeting was held; and, by the 
power afforded by their large holdings, the Carnegies increased 
the Board of Directors from five to seven, dropped Messrs. John 
Walker and Giles B. Bosworth from the Board, and elected to 
the directorate six of the managers of the steel company. Four 
of these, Messrs. Gayley, Moreland, Clemson, and Morrison, had 
not previously been stockholders ; but to qualify them to serve 
as directors, each had now five shares put in his name. The 
others were Lauder, Lynch, and Frick. 

On January 24th the majority in the new Board voted to the 
Carnegie Steel Company a contract for all the coke, at $1.35 a 
ton, that that company could use in its furnaces for five years, 
commencing January ist, 1899, amounting approximately to 
2,500,000 tons a year, or about one-third of the entire product 
of the H. C. Frick Coke Company; and this agreement, pre- 
viously prepared and executed by the Carnegie Steel Company, 
was signed by Mr. Lynch, president of the coke company, under 
his own protest and that of Mr. Frick. The market price of 
coke was then $3.50 a ton. 

This surprising contract, being made retroactive, required 
the coke company to refund to the Carnegies a sum of 
$596,000 paid on account of coke sold during the previous 
year. The further loss to the coke company at prevailing 
prices was $1.65 a ton, or something like $4,000,000 a year. 
This is probably the most astonishing thing that ever happened 
in the course of the Carnegie Steel Company's amazing history. 

As soon as the minority stockholders heard of these pro- 
ceedings they sent the following protest to the president and 
Board of Directors of the H. C. Frick Coke Company, and re- 
ceived the appended reply : 

Gentlemen : I have been informed that your Board of Di- 
rectors on Jan. 24th, 1900, passed a resolution intended to ratify 
an alleged contract with the Carnegie Steel Company, Ltd., 



330 ATTEMPT TO DEPOSE FRICK 

whereby your company is to supply to the latter all the coke it 
may require for use in its furnaces for five years, commencing 
Jan. I, 1899, for $1.35 per ton, delivered on cars at your works, 
and that your company has signed a written memorandum of 
such contract. 

As a stockholder in your company, I protest against any 
such contract, and I demand that you do nothing in recognition 
thereof, and especially that you do not ship or bill any coke to 
the Carnegie Steel Company, Limited, thereunder; and that 
you do not settle with said company for coke shipped to it since 
Jan. 1st, 1899, at the price named in said contract, or at any 
price other than the market price at the time of delivery. I 
deny that such contract was ever made until you attempted to 
do so on Jan. 24th, 1900. This contract is for many reasons 
unfair and fraudulent and against the minority stockholders of 
the H. C. Frick Coke Company. It is made by those who 
represent the majority of stockholders, really in the interest of 
such majority, as against the interests of the H. C. Frick Coke 
Company and the minority stockholders therein. The market 
price of coke on Jan. 24th, 1900, was at least ^3.50 per ton, and 
yet this contract, covering almost one-third of all coke manufac- 
tured by the company, fixes a price of $1.35 per ton. In many 
other respects it unfairly and dishonestly favors the majority 
stockholders of the coke company to the loss of the minority 
stockholders. 

The Carnegie Steel Company, Limited, and Andrew Car- 
negie (who owns more than one-half of the interest in the steel 
company) own together more than one-half of the stock of the 
H. C. Frick Coke Company. A majority of the present Board 
of Directors of the coke company are managers and partners in 
the Carnegie Steel Company. It was this majority who forced 
this contract in favor of the Carnegie Steel Company, Limited, 
on Jan. 24th, 1900. 

I demand that you rescind the said action of your board in 
favor of said contract; that you take such further action as 
may be necessary to rescind and annul said contract. If you 
refuse to act, then I ask that you call a meeting of the stock- 
holders of the coke company to take action and pass upon the 
questions herein raised, and upon the requests I now make. 

Please advise me promptly what your company proposes to 
do in the matter, as it is my intention to take proper legal steps 
to prevent your so doing, if you intend carrying out such pre- 
tended contract. Yours truly, 

S. L. SCHOONMAKER. 



DISINTERMENT OE THE IRONCLAD 331 

" Pittsburgh, Feb. 6th, 1900. 

Mr. S. L. Schoo7imakcr, Nciv York City. 

My dear Sir : I beg to advise that I received your com- 
munication of 1st instant, addressed to the President and Board 
of Directors of the H. C. Frick Coke Company, and I sub- 
mitted the same to the Board at a meeting held Feb. 6th, 1900, 
when the following motion was adopted : 

' That the President be instructed to carry out the contract 
between the H. C, Frick Coke Company and The Carnegie 
Steel Company, Limited, dated January ist, 1899, and all its 
terms and provisions, and that he inform Messrs. Walker and 
Schoonmaker that he is so directed by the Board. ' 
Very Truly Yours, 

Thos. Lynch, 

President. 

Thereupon suit was brought by Mr, Walker and the other 
minority stockholders to enjoin the coke company from selling, 
shipping, and delivering any coke to the steel company under 
the pretended contract. 

In the mean time important events were happening in the 
council-chambers of the steel company. The peaceful accept- 
ance of Mr. Frick's resignation as chairman of the Board proved 
but a lull in the storm. In New York Mr. Carnegie was devis- 
ing a plan for the rehabilitation of an extinct iron-clad agree- 
ment, so as to make it applicable to the new situation. Then, 
in January, he returned to Pittsburg, called a meeting of the 
Managers, and had them go through the ritual he had prepared. 

At one of their interviews about this time Mr. Frick had 
offered to sell his interest in the company to Mr. Carnegie at a 
price to be fixed by arbitrators. This being refused, he offered 
to buy Carnegie's on the same terms. Mr. Carnegie gasped 
with astonishment. It was the most direct challenge of his 
supremacy which he had ever received. The proceedings of 
the Managers, under Carnegie's direction, now contemplated 
the forcible seizure of the Frick interest at book values. How 



332 ATTEMPT TO DEPOSE FRICK 

inadequate these were will be seen from the following state- 
ment of some of them, side by side with the profits made dur- 
ing the previous year : 

Book value, 
Net profit, 1899. Nov. ist, 1899. 

Edgar Thomson Furnaces $3,829,716.68 \ 

Steelworks 614,518.51!- $10,258,703.98 

" Foundry 370,866.80' 

Duquesne Blast Furnaces 2,983,094.79 5,089,967.52 

Steelworks 1,104,728.39 2,057,745.83 

Homestead Steel Works 4,564,413.63 11,909,199.55 

Carrie Furnaces 820,638.65 829,625.42 

Lucy Furnaces 1.303,524.37 1,251,869.99 

Keystone Bridge Works 13,682.68 717,776.49 

Upper Union Mills 1,091,857.88 1,000,000.00 

Lower Union Mills 438,052.03 700,000.00 

Scotia Ore Mines 1,695.74 

Larimer Coke Works 17,276.56 

Youghiogheny Coke Works (loss) 35.73 

Sundries — including 

H. C. Frick Coke Company $1,253,853 

Oliver Iron Mining 1,067,000 

Carnegie Natural Gas 420,000 

Union Railroad 100,000 

Etc., etc 3,845,949.36 

Borrowed from Contingency Fund 50,570.80 

Net earnings for year $21,000,000.00 

While the Board was still in session Mr. Carnegie went out 
to see Mr. Frick, to demand his stock at these book values. 
Mr. Frick, who had remained outwardly unmoved amid all the 
horrors of the Homestead battle and cool in presence of the 
assassin, felt outraged by the intrusion of Andrew Carnegie on 
such a mission; and his anger burst out like a flame. Carne- 
gie hastily retreated, and returned to the Board room white with 
emotion; and later, when the affair came into the courts, he 
made an affidavit charging Mr. Frick with an ungovernable 
temper. 

The further course of this affair, in which, at the instigation 
of Mr. Carnegie, all the partners except Messrs. Hy. Phipps, 
Love joy, and Curry joined, is summarized in Appendix A from 
Mr. Frick's own narrative, which formed part of a bill in equity 
filed in the Court of Common Pleas a month or so later. The 



SENSATIONAL REVELATIONS 333 

revelations of the stupendous profits of the steel industry con- 
tained in this plea set the country agog, so that interest in the 
contest itself became almost secondary. Every newspaper in 
the land printed long extracts from the pleadings ; and columns 
of comments were published on the amazing exhibition of in- 
dustrial efficiency thus presented. Had the Moore option been 
valid at this time there would have been no difficulty in raising 
a hundred million dollars. In other lands the litigation and 
the secrets it revealed attracted the same general attention. 
Everywhere the hope was expressed that the suit would be 
allowed to reach the courts. It was pointed out that " what legis- 
lative bodies and committees of inquiry had failed to accomplish 
might be reached if the secrets of the great corporation were 
passed in review through the courts " ; and it was not only sensa- 
tion-loving and curiosity-seeking people who wanted to know 
more, but legislators and publicists of every kind. 

The Carnegie answer was filed on March 12th. It claimed 
that the plan for forming the limited partnership, which Frick 
had declared to be a general one, was devised by Frick himself, 
and that he acquired much of his interest through the working 
of the so-called iron- clad agreement. It was denied that on 
December 31st, 1899, the association had assets or property, 
which in its legal capacity it could transfer, worth ^250,000,- 
000. While it was admitted that Mr. Frick proved a valuable 
member to the company, it was asserted that " notwithstanding 
his ability " he " is a man of imperious temper, impatient of 
opposition, and disposed to make a personal matter of every 
difference of ■ opinion, even on questions of mere business 
policy. At times, moreover, he gives way to violent outbursts 
of passion, which he is either unwilling or unable to control. 
He demands absolute power and without it is not satisfied." 
The answer maintained that the refusal to submit their 
differences to arbitration was because the company pro- 
posed at all times to maintain the integrity of the iron-clad 
contract. 



334 



ATTEMPT TO DEPOSE FRICK 



There wfere no disclosures, however. The Carnegies had 
had more than enough of them ; and even while this answer 
was being prepared efforts were made to stop the litigation. 
With a studied display of indifference the principal Carnegie 
officials absented themselves on alleged vacations; but their 
movements were conducted with method. Andrew Carnegie 
went golfing in Florida, but stopped in Washington long enough 
to transmit through Mr. Lawrence Phipps the first overture for 




THE "GREAT SHERIFF'S PUZZLE— How to find Carnegie and his forty. parlDers. 

—From a Pittsburg paper. 

peace. The terms accompanying this were refused and others 
suggested; and these in turn were rejected by Carnegie. This 
rejection resulted in Mr. Prick's obtaining sixty per cent, more 
in the final settlement than he otherwise would have had. 
Then Mr. Hy. Phipps took a hand in the negotiations ; and, hav- 
ing previously reached an understanding with Mr. Carnegie, he 
had little difficulty in winning the adhesion of Messrs. Frick, 
Lovejoy, and Walker to a scheme of consolidation and reorgani- 
zation that should safeguard the interests of all and restore an 



SHOWERS OF GOLD 



335 



outward semblance of peace to^lhe association. Five days after 
the filing of the Carnegie answer a peace conference met at At- 
lantic City, when the Carnegie Steel Company underwent the 
last metamorphosis before its final absorption in the United 
States Steel Corporation, and dollars began to rain down upon 
the partners faster than they could count them. 





CHAPTER XXI 

THE FAILURE OF THE IRON-CLAD 

THE settlement of this historic litigation 

out of court before any evidence was 

taken left the public in doubt as to the 

legal value of the document known 

as the iron-clad agreement. As 

this agreement had an important 

influence on the history of the 

several Carnegie organizations, some 

account of it and its failure to work the 

ejecture " of Mr. Frick is called for in 

this narrative; especially as it is not likely 

that any frank statement concerning it will ever be made 

elsewhere. 

In 1884 the practice was inaugurated of rewarding excep- 
tional services of employees by crediting them with an interest 
in the association; Messrs. Curry, Moore, Borntraeger, and 
Abbot being the first to receive this favor. The book value 
of the interests thus assigned was charged against recipients; 
and the shares were held by the company as security until the 
indebtedness had been paid off. Usually the profits alone 
sufficed to liquidate the debt. 

During the next three years other employees were similarly 
rewarded; and to meet this new condition of debtor partners a 
plan of automatic ejecture was devised, so that no junior part- 
ner need be kept in the association any longer than his favor 
lasted. This was the iron-clad agreement of 1887. It was an 
excellent device; for while serving as an incentive to further 
efforts, such a revokable interest also kept the " young geniuses " 

336 



A.V ENGINE OE OPPRESSION 337 

in a properly humble frame of mind. But there was no thought 
of applying this iron-clad to the other partners, whose interests 
were paid up. That was an afterthought. 

In 1892, on the consolidation of the several companies, a 
new iron-clad agreement was drawn up. Concerning this docu- 
ment Mr. Henry Phipps afterwards made the following state- 
ment : 

*' When the consolidation papers were agreed to by Mr. 
Carnegie and me, at his place near Windsor, England, in 1892, 
it was understood that the ' Iron-clad ' should only apply to 
debtor partners, or employees, which was the intent of the 
paper of 1887. Of course much was left to the honor of the 
Managers, who were then, and in whom it was not unreasonable 
for me to impose implicit confidence. Never has it been used, 
to my knowledge, and I am confident the agreement would 
never have been made an engine of oppression and robbery. 

This information was again vouchsafed me when I signed a 
paper relating to my death, and Carnegie said this was only to 
apply to debtor partners, or employees, which was the intent of 
the paper of 1887. ' But,' I replied, * there are clauses in the 
agreement that are unjust,' and he replied, ' Harry, I am ill, and 
am going abroad, and fix it to your satisfaction.' On such a 
promise, so clear and explicit, I would have done anything for 
my friend, and especially in his condition. 

I am very sorry to say that since then he has shown no 
willingness to correct the agreement as promised." 

In apparent conformity with this understanding, limiting its 
application to debtor partners, this iron-clad of 1892 was not 
signed by Messrs. Carnegie, Phipps, and Lauder. Most of the 
other partners signed it, but not all. Under its terms some 
interests of decea'sed or retiring members were bought by the 
company; but no **ejecture" took place. 

In 1897 a new and more stringent agreement was drawn 
up, intended to reach other than debtor partners ; and this was 
signed by Andrew Carnegie and sent from abroad on October 
3d, with a letter to the Board of Managers, saying: 

" I have signed the paper making these corrections, because 
22 



338 THE FAILURE OF THE IRON-CLAD 

I wished you to have something that will keep the Firm right 
so far as my interest is concerned ; but, of course, you will get 
all the signatures upon one corrected paper, by and by. " 

This, however, was never done. Andrew Carnegie's was 
the only signature ever appended to this document. Concern- 
ing it Mr. Phipps wrote on October 4th from London : 

" Please inform the Chairman, President and Board of Mana- 
gers that I refuse to sign the ' Iron-clad ' or any paper of a simi- 
lar character, and that I shall resist the buying of the Com- 
pany's Stock as the proposed Agreement contemplates, and 
thereby creating liabilities of which we have quite sufficient. 
Any business man will admit, and no one will deny, that such 
debts are foreign to the purpose for which our Company was 
formed. Better new capital than no capital, which would be the 
position in which we would be in if any such project were con- 
summated. Besides the act would be clearly illegal. 

For these and other good reasons, I beg that no action in 
the matter be taken." 

So the attempt to extend the provisions of the iron-clad 
failed, and the situation remained as before. 

A futile effort was afterwards made to reach a provisional 
agreement ; and nothing more was attempted until Mr. Carne- 
gie tried to secure the " ejecture " of Mr. Frick. This he sought 
to accomplish in an original and ingenious way. Having 
secured the resignation of Mr. Frick from the chairmanship of 
the company, Mr. Carnegie appeared before the Board of Mana- 
gers on January 8th, 1900, and offered and had passed the 
following resolution : 

" Whereas, as appears by the Minutes of October 19, 
1897, a proposed Supplemental Agreement, dated September 
I, 1897, to the original Agreement, appearing in the Minutes 
of January 18, 1887, was signed by Andrew Carnegie, condi- 
tioned upon all members signing the same, but was objected to 
by Henry Phipps, who refused to sign the same ; and conse- 
quently, that it has not been signed by several other members 
of the firm, and is, therefore, of none effect ; Now, therefore, 
be it 



INTERESTING RITUAL 339 

Resolved: That the Resolution of October 19, 1897, ap- 
proving said Supplemental Agreement, passed in the hope that 
Mr. Phipps would upon reflection withdraw his opposition and 
all members sign, is hereby rescinded ; and the Board decides 
that no further steps be taken with the proposed Supplement, 
thus leaving the original Agreements in full force." 

The minutes then relate that 

" Without a motion, the Secretary was directed to obtain to 
the Supplemental 'Iron-clad Agreement,' dated July i, 1892, 
the signatures of the present members of this Association who 
have not signed the same, it having not been presented for signa- 
ture to the members admitted while the aforesaid Supplemental 
Agreement of September i, 1897, was being drawn up, consid- 
ered, revised and after its adoption. " 

In other words, by expunging a minute on the books of the 
Carnegie Steel Company, it was sought to revive an agreement 
made thirteen years before by the members of an entirely differ- 
ent corporation, Carnegie Brothers & Co. Then an attempt 
was made to graft onto this Carnegie Brothers' agreement 
"a supplemental iron-clad" of the Carnegie Steel Company 
eight years old, which had never been signed by the principal 
owners. To make this double-decked instrument effective, 
there were now added the signatures of Carnegie himself 
and of some members who had no existence at the time the 
agreement was signed by Mr. Frick, against whom all this 
ingenuity was directed. And it was on these proceedings that 
the Carnegie Steel Company rested its case against Henry C. 
Frick in the greatest lawsuit ever commenced in the State of 
Pennsylvania. 

The document itself, called " the Supplemental Iron-clad " 
for the first time in the minutes of the meeting of January 8th, 
1900, reads as follows: 

This agreement. Made this first day of July, a.d., 1892, and 
on certain dates thereafter, as shown, between The Carnegie 
Steel Company, Limited, party of the first part, and each one 



340 THE FAILURE OF THE IRON-CLAD 

of the members of that Association who has hereunto affixed his 
name, party of the second part, witnesseth : 

(I) That the party of the second part, for and in consider- 
ation of the execution and delivery of this agreement by each 
of the other active members of said Association, The Car- 
negie Steel Company, Limited, and in consideration of the sum 
of One Dollar in hand paid by the party of the first part, the 
receipt whereof, by the signing hereof, is hereby acknowledged, 
as well as for other good and valuable considerations, to him 
moving, does hereby covenant, promise and agree to and with 
the party of the first part, that he, the party of the second part, 
at any time hereafter when three-fourths in number of the per- 
sons holding interests in said first party, and three-fourths in 
value of said interests, shall request him, the said party of the 
second part, so to do, will sell, assign and transfer to said first 
party, or to such person or persons as it shall designate, all of 
his, the said party of the second part, interest in the Limited 
partnership of The Carnegie Steel Company, Limited. The 
interest shall be assigned freed from all liens and encumbrances 
or contracts of any kind, and this transfer shall at once termi- 
nate all the interest of said party of the second part in and in 
connection with said The Carnegie Steel Company, Limited. 

(II) The request of the requisite number of members and 
value of interests shall be evidenced by a writing signed by 
them or their proper Agents or Attorneys in Fact ; and a copy 
thereof shall be either served upon the party whose interest it 
is proposed to buy, or mailed to him at his post office address ; 
at least five (5) days before the day fixed in said request to make 
said transfer and assignment. 

(III) The party of the first part covenants and agrees that 
it will pay unto the party so selling and assigning, the value of 
the interest assigned, as it shall appear to be on the books of 
said The Carnegie Steel Company, Limited, on the first day 
of the month following said assignment. 

Said payment shall be in manner as follows : 

If the interest assigned shall not exceed two (2) per centum 
of the Capital Stock at par, the same shall be paid for as follows : 

One-fourth cash within ninety (90) days of the date of the 
assignment, and the balance in two equal annual payments from 
the date of the assignment, to be evidenced by the notes of said 
first party. 

If the interest assigned shall exceed two (2) per centum, 
but shall not exceed four (4) per centum of the Capital Stock 
at par, then the same shall be paid for as follows : One-fourth 



THE DOCUMENT QUOTED 341 

cash in six months after the^ date of the assignment, and the 
balance in three equal annual payments from the date of the 
assignment, to be evidenced by the notes of the said first party. 

If the interest assigned shall exceed four (4) per centum, 
but shall not exceed twenty (20) per centum of the Capital 
Stock at par, then the same shall be paid for as follows : One- 
fourth cash within six months after the date of the assignment, 
and the balance in five equal annual payments from the date of 
the assignment, to be evidenced by the notes of said first party. 

If the interest assigned shall exceed twenty (20) per centum 
of the Capital Stock at par, then the same shall be paid for as 
follows : One-fourth cash within eight months from the date of 
the assignment, and the balance in ten equal annual payments 
from the date of the assignment, to be evidenced by the notes 
of said first party. 

All deferred payments shall bear interest at six per centum 
per annum, payable semi-annually. 

(IV) This agreement, and the option the party of the second 
part hereby gives to the party of the first part, is hereby de- 
clared to be irrevocable, and that it may be carried out in good 
faith, and notwithstanding any effort on the part of the party of 
the second part to evade it, the party of the second part does 
hereby appoint the person, who, at the time when he is called 
upon to act, is Chairman of the party of the first part, the At- 
torney in Fact for said party of the second part, for him and in 
his name, place and stead to assign and transfer the said inter- 
est in said The Carnegie Steel Company, Limited, whenever 
under this agreement it would be the duty of said party of the 
second part so to do. 

This appointment is also irrevocable; is coupled with the 
interest of said party of the second part in said The Carnegie 
Steel Company, Limited, and will justify and warrant the said 
Attorney in Fact to act for the said party of the second part in 
the premises just as efficaciously after the death of said party 
of the second part, or after said party of the second part has 
attempted to revoke this power of attorney or evade his agree- 
ment, as if said party of the second part were alive and living 
up to it in entire good faith. 

(V) Death shall not revoke, alter or impair any of the terms 
of this contract, but the first party shall, after the death of the 
party of the second part, have the following time to elect to buy 
his interest on the terms hereinbefore set out : 

If the interest does not exceed four (4) per centum, four 
months. 



342 THE FAILURE OF THE IRON-CLAD 

If the interest exceeds four (4) per centum, but does not ex- 
ceed twenty (20) per centum, eight months. 

If the interest exceeds twenty (20) per centum, twelve 
months, and the said party of the second part to this agreement 
does hereby direct his personal representatives, after the death 
of him, the said party of the second part, to approve, join in and 
perfect any transfer his said Attorney in Fact may make, and 
the said Executor or Executors or Administrator or Adminis- 
trators of the party of the second part shall carry out this con- 
tract, and all its provisions, just as if said representatives had 
themselves made this agreement. 

(VI) This agreement is hereby declared to be a lien and 
encumbrance upon the interest of said party of the second part 
in said The Carnegie Steel Company, Limited. No attempt of 
the said party of the second part voluntarily to sell, pledge or 
mortgage, and no proceedings adversely against the said party 
of the second part by execution, process of law, or Equity of 
any kind, bankruptcy or insolvency, shall in any way, shape or 
form affect, impair or alter this agreement, or any part of it, 
or take from under its operation the respective interest of said 
party of the second part from the clog hereof. 

Both the parties hereto agree and declare that it is the set- 
tled policy of The Carnegie Steel Company, Limited, and of 
the party of the second part, in entire good faith, and with all 
effort on our part to carry out its true spirit and meaning, this 
agreement; being satisfied that if we do so, it will be greatly 
to the benefit of The Carnegie Steel Company, Limited, and to 
the party of the second part as a member thereof; and that any 
effort on the part of said party of the second part to evade any of 
the provisions of the same will most properly prove his unfitness 
to be connected with said The Carnegie Steel Company, Limited. 

In witness whereof, the party of the first part has hereunto 
set its common seal, attested by the signatures of its Chairman 
and Secretary, and approved by two of its Managers; and the 
party of the second part has hereunto set his hand and seal the 
day and year first above given. 

The Carnegie Company, Limited, 
By H. C. Frick, 

Chairman. 
Attest : Approved : 

(Seal) F. T. F. Lovejoy, J. G. A. Leishman, 

Secretary. Manager. 

F. T. F. Lovejoy, 
Manager. 



THE NOTICE OF '' EJECTURE'' 343 

Then follow a number of signatures, some made " on the 
day and year first above given," namely, July ist, 1892, and 
others, including Andrew Carnegie's, nearly eight years later. 

On the strength of this agreement the following notice was 
now served on Mr. Frick, Mr. Schwab having been delegated 
by Mr. Carnegie to obtain signatures to it : 

" Under the provisions of a certain Agreement between The 
Carnegie Steel Company, Limited, and the partners composing 
it, known as and generally referred to as the 'Iron Clad' 
Agreement, we, the undersigned, being three-fourths in num- 
ber of the persons holding interests in said Association, and 
three-fourths in value of said interests, do now hereby request 
Henry C. Frick to sell, assign and transfer to The Carnegie 
Steel Company, Limited, all of his interest in the capital of 
The Carnegie Steel Company, Limited, said transfer to be 
made as at the close of business January 31, 1900, and to be 
paid for as provided in said Agreement. 

Done at Pittsburg, Fa., this loth and nth days of January, 
1900. 

C. M. Schwab. Andrew Carnegie. 
Gibson D. Packer. Geo. Lauder. 

D. G. Kerr. A. M. Moreland. 
H. E. Tener, Jr. James Gayley. 
A. C. Case. D. M, Clemson. 
Jno. McLeod. Thos. Morrison. 
Lewis T. Brown. L. C. Phipps. 
Geo. E. McCague. Chas. L. Taylor. 
W. B. Dickson. Jno. C. Fleming. 

E. F. Wood. W. W. Blackburn. 
Geo. Megrew. H. P. Bope. 

J. E. Schwab. James Scott. 

Homer J. Lindsay. W. H. Singer. 

Alexr. R. Peacock. W. E. Corey. 

Millard Hunsiker, Geo. H. Wightman. 

per C. M. Schwab, J. Ogden Hoffman. 

(Power Attorney). Chas. W. Baker. 

I hereby certify that the foregoing is a true and correct 
copy of the Original now in file in this office. 
This 15 th day of January, 1900. 

F. T. F. LovEjOY, 

Secretary." 



344 THE FAILURE OF THE I RON- CLAD 

It will be noticed that Mr. Lovejoy simply signed it in his 
official character as secretary of the company. Mr. Curry was on 
his death-bed ; but he was asked to sign it and refused. " Mr. 
Frick is my friend," said Mr. Curry. " And am I not also your 
friend.? " Mr. Carnegie asked. "Yes; but Mr. Frick has never 
humiliated me," was the pathetic answer of the dying man. 

Mr. Henry Phipps not only refused to sign the demand, but 
joined Mr. Frick in protesting against the action of the Board. 
These protests are as follows : 

To The Carnegie Steel Company, Limited : 

I have read a copy of the minutes of the Board of Managers 
of the Carnegie Steel Company, Limited, dated January 8th, 
1900, handed to me Friday afternoon, January 12th, 1900, and 
I desire particularly to call your attention to certain actions of 
the Board regarding the so-called agreements as to partners' 
interests, dated 1887, 1892 and 1897; 

I dissent from some of the statements of alleged facts therein 
contained, and I, certainly, do not agree, but object to and deny, 
that the said action of the Board of Managers on January 8th, 
1900, and, indeed, any action of the Board of Managers, could 
or did re-instate the so-called agreement of 1887. 

As I have heretofore stated, I am opposed and object to any 
attempt not only to force from any partner his interest in our 
Company, but, also, to the right of our Company to use its 
capital in the purchase of any such interest. 

Henry Phipps, Jr. 

Pittsburgh, January 15, 1900. 

To The Carnegie Steel Company, Limited. 

On Friday evening, January 12th, 1900, for the first time I 
learned that the Board of Managers of your Company secretly 
and without notice to me, at a meeting on Monday, January 
8th, 1900, passed a resolution offered by Andrew Carnegie, 
rescinding a former resolution of October 19th, 1897, touching 
the agreement of September ist, 1897, and at the same time 
your Secretary was directed to procure the signatures of the 
present members of the association who had not signed the same 
to what is now for the first time in your minutes called " the 
Supplemental Iron Clad agreement dated July ist, 1892." 



SEIZURE OF THE PRICK INTEREST 345 

This is to notify you that all the said action on January 8th, 
1900, was taken without my knowledge or consent and I do 
hereby protest against and object to the same. In some re- 
spects the recitals or statements therein contained are untrue 
in fact. The action did not and could not as the resolution as- 
serts, re-instate the so-called agreement of 1887. At the in- 
stigation of Andrew Carnegie you now speciously seek without 
my knowledge or consent and after a serious personal disagree- 
ment between Mr. Carnegie and myself, and by proceedings 
purposely kept secret from me to make a contract for me under 
which Mr. Carnegie thinks he can unfairly take from me my 
interest in The Carnegie Steel Company, Limited. Such pro- 
ceedings are illegal and fraudulent as against me, and I now 
give you formal notice that I will hold all persons pretending 
to act thereunder liable for the same. 

H. C. Frick. 

Pittsburgh, January 13th, 1900. 

No attention was paid to these protests, and on February ist 
the following letter was sent to Mr. Frick : 

The Carnegie Steel Company, Limited, 

General Offices ; Carnegie Building, 

Pittsburg, Pa., February ist, 1900. 
Mr. H. C. Frick, 
Building. 

Dear Sir : — I beg to advise you that pursuant to the terms 
of the so called " Iron Clad Agreement " and at the request of 
the Board of Managers, I have to-day acting as your attorney 
in fact executed and delivered to The Carnegie Steel Company, 
Limited, a transfer of your interest in the capital of said Com- 
pany. 

Yours truly, 

C. M. Schwab. 

Such is the interesting story of the famous iron-clad agree- 
ment, and Mr. Carnegie's attempt to use it for the ''ejecture" 
of Mr. Frick. 




CHAPTER XXII 
THE ATLANTIC CITY COMPROMISE 

ONE of the junior members of the 
Carnegie Steel Company, recently 
T^^ Speaking of these events, un- 

consciously adopted the circus 
simile used by one of a former 
generation of partners, else- 
where quoted, in explanation 
of the apparent willingness 
with which he and his col- 
leagues joined Carnegie in the 
effort to depose Frick. " We 
were simply a band of circus 
horses," he said, "and we all jumped as the 
ring-master cracked his whip." 

Although several of the junior partners protested at a secret 
meeting, only one of the well-trained band, besides Curry, openly 
shied and refused to jump at the crack of the ring-master's 
whip. This was Secretary Lovejoy. Entering the Carnegie 
employ in 1881 as a telegraph operator, he had won his partner- 
ship through his unusual ability as an accountant; and for 
many years he had filled the responsible office of secretary to 
the entire satisfaction of his seniors. In particular he had won 
the confidence of Mr. Frick; and during the Homestead strike 
had ably served as the chairman's chief assistant. Frankly ad- 
mitting his obligations to Mr. Frick, he took a unique position 
in the fight; and refused to be cajoled or threatened away from 
the side of his chief. He and Curry were the only ones of the 
thirty odd ''young geniuses " to openly deny that a majority of 

shares necessarily carried with it a surplus of wisdom and 

346 



FRANCIS T F LOVEJOY 



Plate XII. 




LOVEJOY'S INDEPENDENCE 347 

equity. He also accentuated his isolation by filing a separate 
answer in the Equity Suit, in which he advanced in terse phrase- 
ology an original argument against the validity of his colleagues' 
acts. 

The independence thus shown by Mr. Lovejoy greatly facili- 
tated an amicable adjustment of the difficulty; for Andrew 
Carnegie refused to treat with Frick in any way, and it be- 
came necessary for the latter to find some one to represent him 
who had the ability to cope with the combined forces of his 
opponents. From this difficult position Lovejoy emerged with 
credit. 

The first peace conference was held at Andrew Carnegie's 
residence in New York on Saturday, March 17th, 1900. It 
was attended by Messrs. Carnegie, Henry Phipps, Schwab, and 
Lovejoy. The long-talked-of consolidation of the Carnegie 
and Frick companies was now finally agreed upon ; and the pre- 
liminaries settled for a compromise of the personal differences 
of the leading partners. Fearing that the newspapers would 
suspect what was going on if the whole Board of Managers sud- 
denly appeared in New York, it was arranged to continue the 
conference on Monday at Atlantic City; and Carnegie tele- 
graphed to Pittsburg, telling the members of the Board to leave 
on Sunday night for the New Jersey resort. To disarm sus- 
picion they were instructed to take their wives with them. 

Mr. Frick had remained in Pittsburg; but he was kept in- 
formed of the progress of the negotiations over the telephone 
by Mr. Lovejoy. He was satisfied with the plans outlined, 
provided no details inimical to his interests were introduced; 
and Lovejoy spent most of the night drafting the agreement. 

On Monday this agreement was read to the assembled board 
at Atlantic City. In general it was acceptable to Carnegie and 
his adherents; but one clause provoked bitter opposition and 
jeopardized the whole plan. It appeared that Carnegie had 
registered a vow never to recognize P>ick as a partner ; and to 
maintain his consistency he demanded that Frick's interest 



348 THE ATLANTIC CITY COMPROMISE 

should not be given direct to him, but through the hands of a 
trustee. This was the only thing in the agreement that was 
productive of discord; and concerning it Carnegie displayed 
such^'heat and persistence that Love joy, rather than imperil the 
settlement, conceded the point. 

The next day the amended agreement was adopted; and just 
as the last signatures were being affixed Mr. James B. Dill 
arrived by special train from New York to draw up the new 
company's charter. The same afternoon the conference ended; 
and Schwab celebrated the conclusion of peace by a banquet 
at the Bellevue Hotel, Philadelphia, which he had ordered by 
telegraph. 

The agreement thus reached reads as follows : 

MM. Schwab, Carnegie, L. C. Phipps, Morrison, Clemson, 
Gayley and Moreland, representing The Carnegie Steel Com- 
pany, Limited, and Henry Phipps, representing John Walker 
and others of the H. C. Frick Coke Company, agree as follows : 

All the business of The Carnegie Steel Company, Limited, 
and the H. C. Frick Coke Company to be merged substantially 
as shown in paper "A " of June 3rd, 1899, attached hereto, ad- 
justments to be made up to April ist, 1900, which will bring 
the two concerns into the same relative positions as to book- 
values as they occupied April ist, 1899. 

In the matter of the dispute between the two companies as 
to prices of coke, neither party shall be held to be right or 
wrong, both shall be considered equally so, therefore the differ- 
ence will be split in two, each party yielding one-half of its 
claim. 

Andrew Carnegie. 

Henry Phipps. 
F. T. F. Lovejoy. C. M. Schwab. 

Witness : Jas. Bertram. L. C. Phipps. 

Thos. Morrison. 

James Gayley, 

D. M. Clemson. 

A. M. Moreland. 

The same parties representing The Carnegie Steel Com- 
pany, Limited, and F. T. F. Lovejoy representing H. C. Frick, 
under full authority so to do, agree as follows : 



TREATY OF PEACE 349 

The Carnegie Steel Company, Limited, will hand over to 
said Lovejoy Six per cent-'of the Stocks and Securities it ob- 
tains under this merger, said Lovejoy to receipt for the same in 
full of all claims of said Frick against the Company or any of 
its members. To this receipt the signature of H. C. Frick will 
also be appended, and H. C. Frick will thereupon withdraw his 
suit against the Company. Meanwhile all legal proceedings to 
remain in statu quo. 

The Committee to carry out the details of this Agreement 
is to consist of C. M. Schwab, G. D. Packer, F. T. F. Lovejoy 
and A. M. Moreland, who shall act by unanimous consent, but 
that failing, all differences if any will be referred to Judge J. 
H. Reed, whose decision shall be final. 

The plans for carrying out this Agreement are more fully 
set forth in paper marked " B " herewith appended and made 
part of this Agreement. 

We, the undersigned, pledge ourselves to carry out the spirit 
of this agreement in good faith and with every desire to bring 
it to a successful conclusion. 

L. C. Phipps. Andrew Carnegie. 

Thos. Morrison. H. Phipps. 
James Gayley. C. M. Schwab. 
D„ M. Clemson. 
Witness : Jas. Bertram. 
F. T. F. Lovejoy. 
A. M. Moreland. 



STATEMENT "A," SHOWING ACCOUNTS OF STOCKHOLDERS 
IN THE CARNEGIE STEEL COMPANY. LIMITED, AND THE 
H. C. FRICK COKE COMPANY, AFTER THE ACCEPTANCE OF 
CERTAIN OPTIONS ON THE STOCKS, GIVEN APRIL 24, 1899. 

Stockholders Personal Account. Value of C. S. Co., Value of H. C. F. C. 

C. S. Co., Ltd. Ltd. Stock. Co. Stock. 

Andrew Carnegie, Cr. $4,025,055.76 $146,250,000.00 $30,039,898.09 

Henry Phipps, Cr. 151,092.98 27,500,000.00 7,652,354.74 

H.C. Frick, * Cr. 50,911.89 15,000,000,00 16,604,529.50 

George Lauder, Cr. 107,487.38 10,000,000.00 1,187,237.97 

C. M. Schwab, Dr. 1,168,024.90 7,500,000.00 618,575.66 

W. H. Singer, Cr. 358,916.61 5,000,000.00 773,031.18 

H. M. Curry, Dr. 81,486.59 5,000,000.00 771,183.88 

L. C. Phipps, Dr. 656,173,70 5,000,000.00 412,627.36 

A. R. Peacock. Dr. 726,017.98 5,000,000.00 412,259.46 

F. T. F, Lovejoy, Dr. 110,593.76 1,666,666.67 138,029.63 

Thos. Morrison, Dr. 185,067.94 1,666,666.67 137,843.16 

Geo. H. Wightman, Dr. 248,119.44 1,666,666,67 137,661,73 



350 



THE ATLANTIC CITY COMPROMISE 



Stockholders. 

D. M. Clemson, Dr 

James Gayley, Dr 

A. M. Moreland. Dr 
Chas. L. Taylor, Dr 
A. R. Whitney, 
VV. W. Blackburn, D 
Jno. C. Fleming, Dr 
J, Ogden Hoffman, Dr 
Milld, Hunsiker, Dr 
Geo. E. McCague, Dr 
James Scott, Dr, 

H. P. Bope. Cr. 

W. E. Corey. Dr 

Jos. E. Schwab, Dr 

L. T. Brown. Dr 

D. G. Kerr, Dr 
H. J. Lindsay, Dr 

E. F. Wood, Dr 
H. E. Tener, Jr., Dr 
Geo, Megrew, Dr 
G. D. Packer, Dr 
W. B. Dickson, Dr 
A. C. Case, Dr 
John McLeod, Dr 
Chas. W. Baker, Dr, 
Undivided, Dr, 
Mrs. L. C. Carnegie 

John Walker 

Thomas Lynch. . . . 
Vandervort Estate. 
Borntraeger Estate 
G. B. Bosworth.. . 
J. G. A. Leishman 

Robt. Ramsay 

John Pontefract . . 
S. L. Schoonmaker 
Mrs. C. A. Wilson 
Miss H. R. Wilson 
John Walker. Gdn. 
Miss C. B. Wilson 
John T. Wilson . . . 
Miss E. C. Wilson 



Personal Account. 
C.S. Co.. Ltd. 

$258,754.79 

186,619.70 

233,044.75 

96,982.26 



29,091.29 
23,510.01 
62,231.06 

94,791-77 
108,797.58 
106,888.16 

13,285.95 

140.577.43 

176,301.22 

107,002.79 

43,197.23 

43,197.23 

48,690.11 

48,690.11 

48,690.11 

48,690.11 

63,805.55 

63,805.55 

63,805.55 

63.805.55 

271,731.30 



Value of C. S, Co., Value of H. C. F. C. 

Ltd. Stock. Co. Stock. 

$1,666,666.67 $137,661.73 

1.527,777.78 126,401.58 

1,527,777.78 126,220.15 

1,250,000.00 103,337.01 

1,250,000,00 102,974.15 

833,333.33 69,012.29 

833,333.33 69,012.29 

833,333.33 69,012.29 

833,333.33 69,012.29 

833,333.33 69,012.29 

833,333.33 69,012.29 

277,777.78 22,883.14 

833,333.33 68,649.43 

833,333.33 68,649.43 

555,555.55 45,766,29 

277,777.78 22,883.14 

277,777.78 22,883.14 

277.777.78 22,883.14 

277,777.78 22,883.14 

277,777.78 22,883.14 

277,777.78 22,883.14 

277,777.78 22,883.14 

277,777.78 22,883.14 

277,777.78 22,883.14 

277,777.77 22,883.14 

1,250,000.00 102,974.24 

5,018,026.81 

1,434,398.29 

640,794.18 

521,794.83 

360,103.45 

355,497.51 

360,085.87 

194.355.37 

••• 194,355.37 

194,355.37 

92,631.07 

40,166.20 

40,161.36 

40,110.99 

40,082.89 

39.425.79 



Totals Dr. $901,434.95 $250,000,000.00 $70,000,000,00 

Interest adjusted to June i, 1899. 
Pittsburg. June 3, 1899. 



CONSOLIDATION AT LAST 351 

Memorandum " B," covering details agreed upon at Atlantic 
City this 19th March, 1900, by each and every of the persons 
whose names are attached hereto; each agreeing with the others 
that he will do all in his power in good faith to carry out this 
agreement and to induce every other Stockholder in the Com- 
panies named to join in this agreement, being convinced that it 
will be for the best interests of all concerned : 

The business of The Carnegie Steel Company, Limited, the 
H. C. Frick Coke Company, and all the Companies subsidiary 
to each, or either, to be consolidated, thus : 

All of the lands, works and other properties now owned and 
operated by The Carnegie Steel Company, Limited, to be sold 
and transferred to the Carnegie Steel Company, an existing 
Pennsylvania Corporation, saving and excepting the Stocks held 
by it in certain other Corporations, to wit, the H. C. Frick 
Coke Company, with all its subsidiary Companies, the Oliver 
Iron Mining Company, the Union Railroad Co., the Pittsburg, 
Bessemer & Lake Erie R. R. Co., and all Stocks in other Com- 
panies, now held by The Carnegie Steel Company, Limited, 
which are considered permanent investments and not merely 
securities ; payment therefor to be made in Stock of the Car- 
negie Steel Company, the Capital whereof shall be increased to 
($50,000,000) Fifty Million Dollars. 

The Stock now held by The Carnegie Steel Company, Lim- 
ited, in the H. C. Frick Coke Company, the Youghiogheny 
Northern Railway Co., the Youghiogheny Water Co., the Mt. 
Pleasant Water Co., and the Trotter Water Co., to be distrib- 
uted among the Shareholders of The Carnegie Steel Company, 
Limited, in proportion to their several interests, said Share- 
holders to be charged for said Stocks at their respective book 
values as at April ist, 1900. 

Andrew Carnegie. 
Y . T. F. Lovejoy. Henry Phipps. 

Charles M. Schwab. 

Lawrence C. Phipps. 

Thomas Morrison. 

James Gayley. 

David M. Clemson. 

Andrew M. Moreland. 

A Corporation to be formed under the laws of New Jersey, 
having the name and title The Carnegie Company, with $160,- 
000,000 Capital Stock, which Company shall acquire all the 
stock of the Carnegie Steel Company, the H. C. Frick Coke 



352 THE ATLANTIC CITY COMPROMISE 

Co., all their subsidiary Companies, and the Stocks of all other 
Companies now held by The Carnegie Steel Company, Limited, 
which are held as investments; by purchase, paying to the 
Stockholders therefor as follows : 

For all of the Stock in the Carnegie Steel Company, and for 
all of the Stocks now held by The Carnegie Steel Company, 
Limited, saving and excepting the Stocks held by it in the H. 
C. Frick Coke Co., the Youghiogheny Northern Rly. Co., the 
Youghiogheny Water Co., the Mt. Pleasant Water Co., and the 
Trotter Water Co., One hundred and twenty-five million dollars 
in Stock of The Carnegie Company and a like amount in Bonds 
of said Company, as hereinafter described : 

For all of the Stock in the H. C. Frick Coke Co., the 
Youghiogheny Northern Rly. Co., the Youghiogheny Water 
Co., the Mt. Pleasant Water Co., the Trotter Water Co., and 
the Union Supply Co., Limited; Thirty-five million dollars in 
Stock of The Carnegie Company, and a like amount in Bonds 
of said Company, as hereinafter described. 

Preliminary to the foregoing, adjustments shall be made as 
follows : 

A Dividend shall be declared by The Carnegie Steel Com- 
pany, Limited, of such amount as shall be necessary to make 
the " Book Values " of the Stocks of The Carnegie Steel Com- 
pany, Limited, (exclusive of its holdings in the H. C. Frick 
Coke Co. and its subsidiary Companies) on the one hand, and 
of the H. C. Frick Coke Company and all its subsidiary Com- 
panies on the other, relatively the same on April ist, 1900, as 
they were on April ist, 1899, when the values of ^250,000,000 
and ^70,000,000, respectively, were first established. 

After The Carnegie Steel Company, Limited, shall have 
distributed among its shareholders its holdings of Stock in the 
H. C. Frick Coke Co. and its subsidiary Companies, adjust- 
ments shall be made between all the Stockholders in the H. C. 
Frick Coke Co., so that each shall hold his proper and propor- 
tionate amount of Stock in the subsidiary Companies; such 
adjustments to be made at the respective " Book-values," April 
1st, 1900, of the said Stocks. 

The Bonds to be issuea by The Carnegie Company shall be 
in such form as shall be agreed upon by the Committee herein- 
after named, under the directions of the General Counsel, and 
shall embody the following : 

Bonds payable in One hundred years; interest payable in 
New York, semi-annually, at five per cent per annum, free of 
all Tax; to be in such amounts, $1,000, $5,000 and $10,000, 



THE CARNEGIE COMPANY 353 

as may be found best; to^be divided into four series of $40,- 
000,000 each so as to make interest fall due February ist and 
August 1st; March ist and September ist, May ist and No- 
vember I St, June 1st and December ist of each year; secured 
by a Mortgage or Deed of Trust covering all the Stocks held 
by The Carnegie Company in all the subsidiary or operating 
Companies ; after Five years a Sinking Fund of one-half of one 
per cent, on said Bonds to be established; Bonds to be subject 
to be drawn for redemption out of Sinking Fund at any time at 
1.05 after five years. In case of default in the payment of 
interest, the principal may become due and payable. No per- 
sonal liability on Bonds; to be registered or not, at holder's 
option; with such other provisions as are usual or advised by 
counsel for the proper protection of the Bondholders. 

Each Stockholder in The Carnegie Company whose interest 
has not been fully paid up shall have the right and privilege at 
his option, of selling to The Carnegie Company, at par, suffi- 
cient of his Bonds to liquidate his indebtedness, or of deposit- 
ing as collateral security for such indebtedness. Bonds or Stock 
of The Carnegie Company in proportion to his indebtedness ; 
three times in Stock or one and one-half times in Bonds, at his 
option. 

Stock in The Carnegie Company shall be reserved to the 
amount of $3,200,000 for the purpose of selling interests in 
said Company to deserving officials and employees, carrying out 
the plan heretofore established by Carnegie Brothers and Co., 
Ltd., which is declared to be an essential feature of the new 
Company. 

Signed in duplicate ; one copy being intrusted to A. M. 
Moreland, Secretary of The Carnegie Steel Company, Limited, 
and the other copy to F. T. F. Love joy. 

Andrew Carnegie. 
Henry Phipps. 

C. M. Schwab. 
L. C. Phipps. 
Thos. Morrison. 
James Gayley. 

D. M. Clemson. 
A. M. Moreland. 
F. T. F. LovEjoY. 

Witness : Jas. Bertram. 

We, the undersigned. Shareholders in The Carnegie Steel 
Company, Limited, having read the foregoing Agreement, do 
23 



354 THE ATLANTIC CITY COMPROMISE 

now hereby, by the signing hereof, fully approve the arrange- 
ment and join in the same as to our interest. 

George Lauder, 

pr. Andrew Carnegie. 

Gibson D. Packer. 

We, the undersigned. Stockholders in the H. C. Frick Coke 
Company, having read the foregoing Agreement, do now here- 
by, by the signing hereof, fully approve the arrangement and 
join in the same as to our interest. 

Mrs. Lucy C. Carnegie, Ex. 

by Andrew Carnegie. 

Five days after the signing of this agreement a charter was 
obtained of the State of New Jersey, incorporating the Carne- 
gie Company for the purpose of acquiring all the stock of the 
Carnegie Steel Company, the H. C. Frick Coke Company, all 
their subsidiary companies, and the stocks of all companies 
hitherto held by the Carnegie Steel Company. It is worth 
noticing that the committee charged with the carrying out of 
the agreement ignored that part of it which, at the instance of 
Mr. Carnegie, excluded Mr. Frick ; and his name appeared third 
on the list of incorporators of the new company, as a subscriber 
for 15,484 shares. 

On March 30th the committee made its report concerning 
the adjustment of the relative book values of the two merging 
companies as follows : 

Pittsburg, Pa., March 30, 1900. 

To The Board of Managers of 

The Carnegie Steel Company, Limited. 

The Committee appointed by the Shareholders of The Car- 
negie Steel Company, Limited, and the H. C. Frick Coke Com- 
pany, for the purpose of carrying out the plans of Re- Organiza- 
tion of the Carnegie Interests, beg leave to report : 

In the matter of the adjustment of the relative Book Values 
of The Carnegie Steel Company, Limited, and the H. C. Frick 
Coke Company with its subsidiary Companies : 



AN 88 PER CENT. DIVIDEND 355 

At April 1st, 1899, tl>e relative Book Values were as fol- 
lows : 

The Carnegie Steel Company, Limited .... 3.27986 
H. C. Frick Coke Company and Allies. ... i. 

Based on careful estimates of March Profits 
of all the Companies whose Stock is included, 
the same relative Book Values, at April i, 1900, 
show a surplus for distribution to Shareholders 
of The Carnegie Steel Company, Limited, of. .$16,277,464.69 

To this should be added the holdings of The 
Carnegie Steel Company, Limited, in the Stock 
of the H. C. Frick Coke Company and its sub- 
sidiary Companies, carried on the Steel Com- 
pany's books at 5)585,174.39 



Total for distribution $21,862,639.08 

This Committee would, therefore, recommend the declaring 
by The Carnegie Steel Company, Limited, of a final Dividend 
of Sd>% or $22,000,000.00, payable as follows : 

To cover the Value of the Stock of the H. 
C. Frick Coke Company and its subsidiary Com- 
panies charged to Partners in accordance with 
the Re- Organization Agreement $5> 585,174.39 

3^, payable in Cash on demand by either 
" Paid-up " Partners or ** Debtor " Partners whose 
interests were purchased not later than January 
I, 1899 750,000.00 

Balance payable at such times and in such in- 
stalments as this Committee shall decide after 
consultation with the principal Partners and the 
Treasurer . . . ,' i 5,664,825.61 

Total $22,000,000.00 

Respectfully submitted, 

C. M. Schwab. 
G. D. Packer. 
F. T. F. LovEjOY. 

A. M. MORELAND. 



356 



THE ATLANTIC CITY COMPROMISE 



The following is a correct list of stockholders and bond- 
holders of the Carnegie Company, as formed or organized after 
the Frick- Carnegie suit: 



Capital $160,000,000.00 

Bonds $160,000,000.00 

Par Value of Stock, $1,000.00 per Share. 

Shares of Stock. Bonds. 

Andrew Carnegie 86, 3S2 $88, 147,000 

Henry Phipps 17,227 17,577,000 

Henry C. Frick 15,484 15,800,000 

George Lauder 5,482 5, 593, 000 

Charles M. Schwab 3,980 4,061,000 

Henry M. Curry 2,829 2,886,000 

William H. Singer 2,830 2,886,000 

Lav,'rence C. Phipps 2,654 2,707,000 

Alexander R. Peacock 2,653 2,707,000 

Lucy C. Carnegie 2,459 2,510,000 

Francis T. F. Lovejoy 884 902,000 

James Gayley 885 902,000 

Thomas Morrison 8.g5 902,000 

Andrew M. Moreland 885 902,000 

Daniel M. Clemson 885 902,000 

George H. Wightman 884 902,000 

John Walker 722 737,ooo 

Charles L. Taylor 663 677,000 

Alfred R. Whitney 663 677,000 

John C, Fleming 442 451,000 

William W. Blackburn 442 451,000 

J. Ogden Hoffman 442 451,000 

Millard Hunsiker 442 451,000 

George E. McCague 442 451,000 

James Scott 442 451,000 

William E. Corey 442 451,000 

Joseph E. Schwab 442 451,000 

Thomas Lynch 317 323,000 

Henry P. Bope 295 301,000 

Lewis T. Brown 295 301.000 

Robert T. Vandervort 255 260,000 

John B. Jackson 176 179,000 

John G. A. Leishman 176 179,000 

Giles B. Bosworth 176 179,000 

David G. Kerr 147 150,000 

Homer J. Lindsay 147 150,000 

Ezra F. Wood 147 150,000 

Hampden E. Tener, Jr 147 150,000 

George Megrew 147 150,000 

Gibson D. Packer 147 150,000 

William B. Dickson 147 150,000 



THE CARNEGIE VETERANS 

Shares of Stock. 

Albert C. Case 147 

John McLeod 147 

Charles W. Baker 147 

Janet E. Ramsay 95 

John Pontefract 95 

Sylvanus L. Schoonmaker 95 

Azof R. Hunt 74 

Alva C. Dinkey 74 

P. Toestcn Berg 74 

Charles McCreery 74 

Caroline A. Wilson 45 

Helen R. Wilson ig 

Clara B. Wilson 19 

John T. Wilson 19 

Edna C. Wilson 19 

James G. Hunter 19 

Emil Swenson 19 

James J. Campbell 19 

Frederic H. Kindl 19 

James B. Dill i 

Andrew M. Moreland, Trustee 3,189 

Total 7 160,000 



357 



Bonds. 
^150,000 
150,000 
150,000 
97,000 
97,000 
97,000 
75,000 
75,000 
75,000 
75,000 
46,000 
20,000 
20,000 
20,000 
20,000 
19,000 
ig,ooo 
19,000 
19,000 



$160,000,000 



Thus was reached the final metamorphosis of the Carnegie 
Steel Company. In the new organization Mr. Frick was 
omitted from the directorate, as was also Mr. Carnegie. Mr. 
Lovejoy was also dropped. But outwardly peace prevailed; 
and the only remaining trace of a past conflict is the Society 
of Carnegie Veterans, formed of the loyal band of Carnegie 
adherents. No former partner is eligible for membership 
in this association who did not take part in the attempt to de- 
pose Mr. Frick. Once a year these young geniuses hold a ban- 
quet ; and, amid palms and electric mottoes to the glory of him 
who made them rich, recount their battles and congratulate each 
other on the outcome of their victory. And the dear departed 
shades of Kloman, Shinn, Coleman, T. M. Carnegie, Stewart^ 
Curry, and others long forgotten, would listen in vain for a word 
of recognition of their share in these triumphs. 




CHAPTER XXIII 
THE BILLION-DOLLAR FINALE 

THE absorption of the Carnegie Company by 
the United States Steel Corporation has been 
invested with much dignity and lofty cir- 
cumstance by numerous writers in reviews 
and magazines ; and owing to its magnitude, 
running into hundreds of millions, the 
transaction has struck the popular imagina- 
tion and acquired a world-wide interest. To those who watched 
the incident from the inside, who saw the framework of the 
scenery and the elaborate mechanism of the stage effects, who 
attended the rehearsals and heard the subdued tones of the 
prompter, there was a certain grim humor in a performance 
which those in front watched with bated breath. But despite 
its lack of spontaneity, the proceeding had the dignity con- 
ferred by magnitude; and its brilliant success made it impres- 
sive even to those who heard the creaking of the machinery. 

The time is not yet ripe for a full and frank description of 
the events leading up to this important consolidation ; but a 
rough outline of them may be given. 

About a year before Mr. Frick resigned the headship of the 
Carnegie Steel Company he appointed a committee, with Mr. 
Clemson as chairman, to report on a project he had formed of 
building a tube works at Conneaut, the Lake Erie terminus of 
the Bessemer Railroad. There being little freight from Pitts- 
burg to the Lake port, the ore trains returned for the most part 
empty; and to utilize this profitless haul, various plans had 
been discussed by Mr. Frick and his colleagues for the build- 
ing of blast-furnaces and other works at Conneaut that would 

358 



PICKWICKIAN HUMOR 359 

call for Pittsburg coal and eoke. One of these schemes is out- 
lined in the minutes of the meeting of the Board of Managers 
held on January i6th, 1899, previously quoted; and at the same 
meeting Mr. Clemson made a remark which showed that, after 
making the investigation authorized by Mr. Frick, he was in 
favor of also starting the tube works. 

It is probable that these works would have been built by the 
Carnegie managers but for the attempt made the same year to 
sell out to the Moore Syndicate ; it being thought undesirable 
to antagonize, while such a deal was pending, the important finan- 
ciers who were interested in the National Tube Company, with 
which the new works would have come into competition. But 
there was no idea, at this time, of holding the tube project as a 
threat over anybody. It was a simple business plan growing 
out of the need for filling the empty ore-cars on their return to 
Conneaut. 

After the reorganization of the steel company consequent 
on the withdrawal of Mr. Frick, it was seen by Mr. Carnegie 
that this tube project might be revived and utilized to force 
the purchase of at least his own holdings in the Carnegie 
Company, and perhaps of the whole concern. So the plan was 
gone over afresh, amplified and made definite, and then given 
to the newspapers by the Carnegie press agent and by Carnegie 
interviews. Thus it was published the length and breadth of 
the country as the settled purpose of the steel company. Here 
are two of these statements : the first as furnished by the Car- 
negie press agent, and the second in a characteristic interview 
with Andrew Carnegie. The Pickwickian humor of the latter 
will not be lost on the reader who recalls the discussion of the 
Carnegie managers in 1899 concerning the Conneaut project, 
quoted in the eighteenth chapter of this book. 

" It has been determined by the Carnegie Company, in order 
to utilize this now profitless haul, to establish at the lake ter- 
minal, where it already owns great docks and has ample facilities 
for handling ore and for the lake shipment of the finished prod- 



36o THE BILLION-DOLLAR FINALE 

uct, an extensive pipe and tube manufacturing plant, represent- 
ing an investment of ^12,000,000. Ttie projected works will 
stretch over a mile along the lake front, and will be the most 
extensive and complete plant of the kind in existence. Electric 
power will be mainly used for driving the machinery, and the 
system of operation will be continuous, the ore being unloaded 
from vessels at one end and worked through successive stages 
of iron and steel-making in a direct line to the finished pipe 
and tube at the other end." — World's Work. 

" Immediately following the Carnegie Company announce- 
ment of the location of a tube plant at Conneaut Harbor, Ohio, 
rumors were set afloat throwing some doubt on the sincerity of 
the company's intention to carry out the announced plans. In 
the iron trade there was an attempt to find a reason for the loca- 
tion of the plant at Conneaut rather than in the Pittsburg dis- 
trict. Regarding the reasons for going outside of the Pittsburg 
district Andrew Carnegie was quoted last week as follows : 'In 
the first place I am bound to say that Conneaut was not con- 
sidered until the Pennsylvania Railroad, without consulting, 
doubled our export rates . . . which led our people to take up 
the question : How can we escape from the grasp of this arbi- 
trary railroad combination.? A study of the subject convinced 
every one that we could do so by taking to water. When I re- 
turned from Europe it was to find all agreed that this was the 
method of relief. . . . Our establishment at Conneaut will 
benefit Pittsburg, because we shall give the Pittsburg railroads 
an object lesson. A very small proportion of our freight will 
go by rail from these works. We are already in the shipping 
business, and have only to add half a dozen small steamers to 
our fleet to ply to the important lake cities, distributing steel 
and loading up with scrap, of which we shall use an enormous 
quantity. ' . . . 

Asked whether the proposed plant was supposed to be a 
blow at the National Tube Co., Mr. Carnegie replied that at 
one time the original National Company purchased billets from 
his company, but later decided to work its own blast furnaces 
and make its own billets. Continuing he said : * As I under- 
stand the policy of the Carnegie Steel Co., it is to co-operate in 
every way with its fellow manufacturers in the industrial world, 
and not to push itself into any new field save in self-defence. 
We did not leave the National Tube Co. They left us, which 
they had a perfect right to do, of course. Now we are ready to 
shake hands and co-operate with them in the most friendly 



CONVERTING THE EINANCIERS 



361 




In the conversion of the heathen.' 



spirit. We arc better for^them than a dozen small concerns, 
conducted in a small, jealous way. We believe there is room 
enough for the two concerns," 
etc. — Iron T^'adc Review ^ Janu- 
ary 17th, 1901. 

In the conversion of the 
heathen, missionaries have 
found it useful to describe 
the condition of the 
damned before presenting 
a picture of the joys of the 
blessed. It was on some 
such principle that the 
threat of industrial war was 
thus made by the Carnegies 
before the blessings of co- 
operation and consolidation 
were set out before the vision 
of the alarmed financiers of the country. The panic produced 
by the double threat of the Carnegies to build a rival tube works 
and to enter into competition with the great Pennsylvania Rail- 
road has been graphically described by a recent magazine writer : 

" Either project as a threat would have been alarming. The 
two together as imminent and assured accomplishments pro- 
duced a panic. And a panic among millionaires, while hard to 
produce is, when once under way, just as much of a panic as is 
a panic among geese. They ran this way and that ; they hid 
one behind another; they filled the newspapers with their 
squawkings; they reproached, implored, accused each other. 
At last they ran to their master — Morgan. And he negotiated 
with Carnegie." 

But the negotiations came later. They were preceded by a 
bankers' dinner, at which were preached the joys of industrial 
peace. This famous dinner also grew out of a previous inci- 
dent connected with Mr. Frick. 

Somewhere about the time of the purchase of the Moore 



362 THE BILLION-DOLLAR FINALE 

option, Mr. Frick invited a number of prominent bankers to 
Pittsburg, to show them the armor-plate vault that had just 
been built for the Union Trust Company. Incidentally they 
were given an opportunity of seeing the extent of the iron and 
steel works at Pittsburg. Up to that time the resources of the 
Iron City were but imperfectly known in Wall Street. This 
visit showed that it was the busiest place in the world, and the 
centre of its greatest industry. Duly impressed, the bankers re- 
turned to New York ; and the courtesies they had received as 
Mr. Prick's guests were now treated as an outstanding asset of 
the Carnegie Steel Company. Through the influence of Mr. 
Albert C. Case, credit agent of the Carnegie Company, and that 
of Mr. Charles Stewart Smith, an intimate friend of Andrew 
Carnegie, arrangements were made with a prominent banker of 
New York, who had been among those entertained by Mr. 
Frick, to give a return dinner, ostensibly in honor of Mr. 
Schwab. This dinner was duly given ; and, as a spontaneous 
outburst of enthusiasm for Mr. Prick's earlier protege, it has 
been much written about and discussed. 

Mr. Morgan attended the dinner, and listened with great 
interest to Mr. Schwab's views on industrial combinations — 
" views apparently so large, so wise, and so interesting that Mr. 
Morgan was strongly impressed by the speech and the speaker. 
Then there began a series of interviews which eventually led 
to the founding of the United States Steel Corporation, to the 
realization of Mr. Carnegie's desire to retire from the control 
of the business,"* and to the sale and absorption of the Carne- 
gie Company. It was the most masterly piece of diplomacy in 
the history of American industry, and formed a fitting climax 
to Andrew Carnegie's romantic business career. 

The further story of the merger has been told a hundred 
times and need not be repeated here. The part of the Carne- 
gies in it is indicated in the following letter to stockholders, 
now first published : 

* Prof. Henry Loomis Nelson. 



STORY OF THE MERGER 363 

THE CARNEGIE COMPANY 

Offices; Carnegie Building, 

Pittsburg, Pa., gtJi MarcJi, igoi. 

Personal and Confidential. 
Dear Sir: 

To facilitate the exchange of the Stock of The Carnegie 
Company for Stock of the United States Steel Corporation, the 
undersigned, at the request of a majority of the Stockholders, 
have agreed to act as a Committee, on behalf of their Fellow 
Stockholders, to receive Certificates of Stock of The Carnegie 
Company, and to make the exchange for shares of Preferred and 
Common Stock of the new Company. 

You are therefore requested, if you desire to exchange your 
stock and to have this Committee act for you, to deliver the 
Certificates of Stock of The Carnegie Company held by you, to 
W. W. Blackburn, who will deliver to you the receipt of the 
Committee therefor. Such Certificates must be endorsed in 
blank (or may be accompanied by separate powers of attorney), 
with the names of the undersigned inserted as attorneys in fact, 
with power to them or any two of them to transfer the saic'. 
Shares upon the books of the Company ; proper revenue stamps 
to be attached. The receipt appended hereto will then be 
signed. 

The basis of exchange is as follows : 

One share of the Carnegie Company stock (par value 
$1,000) to receive of the United States Steel Corporation 
Stock 15.3558 Shares of Seven Per Cent. Cumulative Pre- 
ferred, par value ;^ioo — $1,535.58; 14.1061 Shares Common, 
par value $100 — $1,410.61. No scrip will be issued for frac- 
tional Shares, but exchange will be arranged at the rate of $100 
per Share for Preferred and $50 per Share for Common, viz. : 

Where a depositor is entitled to less than one-half of one 
Share of Preferred or Common Stock, he will receive cash for 
same; and where entitled to more than one-half of one Share 
of Preferred or Common Stock, he will be allotted and required 
to pay for the fractional Share at the above rate. 

A deposit of Stock with the Committee will constitute an 
acceptance of the above terms by the depositor. 
Yours respectfully, 

C. M. Schwab, \ 

L. C. Phipps, ^ Committee. 

W. W. Blackburn. \ 



364 THE BILLION-DOLLAR FINALE 

Had all the stockholders been subject to these terms it 
would have meant that the ;^ 160,000,000 of the Carnegie Com- 
pany's stock would have been exchanged for the United States 
Steel Company's stock as follows: 

Seven per cent, cumulative preferred $240,569,280 

Common stock 225,697,760 

$466,267,040 
Add $160,000,000 bonds exchanged for the same 

amount of Carnegie bonds 160,000,000 

Total 0626,267,040 

As a matter of fact, however, Andrew Carnegie, Mrs. Lucy 
C. Carnegie, and George Lauder were paid entirely in United 
States Steel Company bonds, at the rate of $1,500 per share. 
Thus for 96,000 shares of stock in the Carnegie Company they 
received $144,000,000 in bonds of the United States Steel Cor- 
poration. The balance of the $304,000,000 bond issue of the 
latter, or $160,000,000, was exchanged at par for the $160,000, - 
000 bond issue of the Carnegie Company. 

For the balance of the stock of the Carnegie Company, i.e., 
64,000 shares, was issued $98,277,120 in preferred stock and 
$90,279,040 in the common stock of the United States Steel 
Corporation. 

At the time of purchase the bonds and the preferred stock 
were considered worth par and the common stock 50; making 
the total amount paid at that time $447,416,640. Since that 
time the stocks have declined ; but the enhancement in the 
market value of the bonds has more than made up the differ- 
ence. The present value of the securities issued for the Car- 
negie properties, computing bonds at 114, preferred stock at 
84^, and common stock at 35, would make a total of $461,- 
201,830. Add to this the $22,000,000 dividend paid to Car- 
negie stockholders the previous year in adjustment of values in 
the consolidation of the coke and steel properties, and we reach 
the total cash value of the business to which Kloman's little 
forge had grown in forty years. 

THE END. 



APPENDIX 

THE E Q^U I T Y SUIT 

Some extracts from the pleadings of Henry C. Frick 

On the 14th day of January, 1889, your orator was elected chairman 
of Carnegie Brothers & Co., Limited, and continued to act as such chairman 
until the new association of the Carnegie Steel Company, Limited, was 
formed. He was then elected chairman of the latter, and continued to act 
as such until December 5th, 1899. 

On January nth, 1895, with the assent of those interested and with a 
view to enable your orator to perform duties which were believed to be of 
more value to the firm than those then imposed upon said chairman, the 
office of president was created. Upon said officer was placed the details 
of the duties your orator had theretofore performed as chairman. 

Your orator continued as chairman with general supervisory power 
until December 5th, 1899. About that date Carnegie without reason, and 
actuated by malevolent motives, demanded his resignation of said position. 
Recognizing Carnegie's paramount influence as the holder of a majority 
interest, and desiring to prevent the evil which might result from discord, 
your orator acquiesced in the demand and gave his resignation. 

As chairman of said companies your orator had participated largely in 
and directed the business conducted by them and, until the time of his 
enforced resignation, said business was conducted to a large extent under 
his personal supervision, management, and direction, Carnegie lived in 
New York City. He spent much of his time abroad, remaining there con- 
tinually, at one time, for over eighteen months. Of course he was con- 
sulted about important matters, but he rarely participated in the current 
management of the business. 

For various reasons, none just, not necessary now to be stated, but 
which will appear hereafter in the taking of testimony, Carnegie 
has recently conceived a personal animosity towards your orator. 
This partly arose from the failure of your orator, in connection with 
others, to avail of an option given by Carnegie in consideration of the 
sum of one miUion, one hundred and seventy thousand dollars ($1,170,000), 
to Carnegie paid, and now retained by him, as a forfeit to purchase his 
(Carnegie's) interest in said Steel Company, Limited, for the sum of about 
one hundred and fifty-seven million, nine hundred and fifty thousand dollars 
(>i 57:9505000), which sum Carnegie insisted should be so preferred and 
secured that he would virtually have a first mortgage on all the partnership 
assets and thus gain a preference over all his partners. 

As has been heretofore said, on the 4th day of December, 1899, with- 
out good reason, and from malevolent motives towards me, Carnegie de- 
manded the resignation by your orator of his office of chairman of said 
company. This resignation, in the interest of harmony, was tendered. 
Since that time Carnegie has secured control of the whole association and 
of its affairs, and has compelled the co-partners, other than Henry Phipps, 
Jr., F. T. F. Lovejov, and Henry M. Curry, and perhaps others, who refused 
to carry out his orders and desires, to pass such resolutions and do such 
acts as he dictated, without regard to their conformity to their real wishes, 

365 



366 APPENDIX 

or to their judgment, as to the true policy of the association. Many of the 
partners were unable or unwilling to incur his animosity, lest he might at- 
tempt to forfeit their interests in the association. Some of them were prac- 
tically unable to resist his will because of their large indebtedness thereto. 

In order that he might injure your orator, whilst benefiting himself, 
Carnegie conceived a scheme to forfeit the interest of your orator in the 
association, worth upwards of fifteen million dollars ($15,000,000), in such 
way as would not oblige him to pay therefor one-half of its real value and 
would enable him to make payment therefor in small instalments at very 
long intervals of time. 

As part of this fraudulent scheme, Carnegie, who had rarely attended 
the meetings of the Board of Managers of the Steel Company, Limited, 
theretofore held, presented himself at a meeting of the said board, held on 
the 8th day of January, 1900, after the resignation by your orator of his 
chairmanship, and when he was not present. Carnegie then presented to 
said Board of Managers resolutions by him previously prepared, which he 
caused to be adopted. Many of the statements in said resolutions were 
false. The whole of the resolutions were misleading. In them he referred 
to a certain so-called iron-clad agreement. Carnegie followed up his action 
in this respect by obliging the Board of Managers to instruct the secretary 
to receive signatures to this so-called iron-clad agreement, which, for the 
first time, he called a supplemental iron-clad agreement, of July 1st, 1892. 
No such agreement had ever been executed by Carnegie. Many other 
members of the firm had never executed the same. This so-called agree- 
ment was inoperative and void. Carnegie knew that it was void and in- 
operative. He knew that neither he nor the Carnegie Steel Company had 
any power to compel any person to sell his interest in the firm in pursuance 
thereof; yet, knowing this, without your orator's knowledge, secretly, after 
said resolutions had been passed, he signed for the first time said so-called 
iron-clad agreement of July ist, 1892. At the same time, or shortly after, 
he caused, directly or indirectly, other persons to sign the same, with a 
fraudulent intent thereby, and without your orator's knowledge or consent, 
to make a contract for him under which he, Carnegie, could seize your 
orator's interest in said firm. All these acts he carefully concealed from 
your orator, his partner. Subsequently, in person, Carnegie threatened 
your orator when he called upon him, that unless he would do what he, 
Carnegie, desired, he would deprive your orator of his interest in the firm. 
In pursuance of his fraudulent intent and in furtherance of his said scheme 
of fraud, Carnegie caused to be served on your orator on the 15th day of 
January, 1900, a notice purporting to be given under and in pursuance of 
said so-called iron-clad agreement. In this demand was made, in the name 
of Carnegie and in that of other persons who had been forced by him to 
sign the same, that your orator should transfer his interest in said Carnegie 
Steel Company, Limited. Having failed to secure this transfer, Carnegie 
persuaded Schwab, one of the defendants, who was acting as president of 
said association, to transfer, on the first day of February, 1900, on the 
books of the company, your orator's interest in said Steel Company, Lim- 
ited, as if he were entitled to make said transfer as attorney in fact of your 
orator. After Schwab had made this pretended transfer, Carnegie pre- 
tended, now pretends, and many of the partners under his compulsion 
pretend, that the Carnegie Steel Company, Limited, owns all your orator's 
interest in said firm. Carnegie, being the owner of 582 per centum of the 
entire capital thereof, is now pretending to be the owner of over 60 per cen- 
tum of your orator's said interest, thus pretended to have been acquired. 
Carnegie further pretends that he need not and will not pay for your 



THE EQUITY SUIT 367 

orator's interest what it is fairly worth, but that he can only be compelled 
to pay a price which will be defermined by himself, and by the partners he 
controls. This price, he contends, can only be demanded by your orator 
in such small instalment<5 during a term of years of such duration as will, 
probably, not only enable the company to entirely pay for your orator's 
interests by using the share of the profits applicable to them, but have a 
surplus left to the company. Thus, it is part of Carnegie's scheme not 
only to seize your orator's interest, but to make it pay for itself out of the 
profits, and thereafter leave Carnegie, in large part, the owner of said 
interests, with a large surplus of money besides. Though Carnegie pre- 
tends that he had thus secured a large part of your orator's interest in a 
way which will inure to his benefit, he denies all individual liability what- 
ever for its payment, and claims that the only party who will be obliged to 
pay the price he will determine to give will be the Carnegie Steel Company, 
Limited; which he will use for that purpose. 

The exact manner in which Carnegie will seek to depreciate the value 
to be paid for your orator's interest cannot be stated by your orator in de- 
tail with certainty; but he believes and therefore avers that although 
Carnegie's attention and that of the defendants have been called by him to 
the fact that the values of the company assets on its books were wholly in- 
adequate, and although he and the defendants have been requested to 
make said values conform with the truth, he, the said Carnegie, will use 
figures put upon the books years ago, which are obsolete, and are not by 
any of the defendants pretended to be correct ; will fail to put any valuation 
upon assets of immense value ; and will resort to other illegal and unfair 
devices. 

Your orator shows to your Honors that this attempt of Carnegie to 
expel him from the firm and seize his interest therein at but a mere fraction 
of its real value, is not made by him in good faith and for the best interests 
of the Carnegie Steel Company, Limited. It is not actuated by honorable 
motives on his part, nor for the future good of the firm, but is a determina- 
tion to punish your orator, principally, because of the failure of the scheme 
by which Carnegie was to reahze over $157,000,000 for his interest, and, 
also, in part, to make gain for himself by seizing your orator's interest at 
very far below its real and fair value. 

In order that the business of the firm of the Carnegie Steel Company, 
Limited, might not be jeopardized by inharmonious relations between the 
partners and that its enormous business might be carried on by united and 
harmonious action, your orator was wilHng, upon ascertaining the animosity 
of Carnegie towards himself, and his determination to drive him from the 
firm, to dispose of his interest therein at a fair value. This Jact was stated 
by your orator to Carnegie when the latter called, in January, 1900, at his 
office, in an endeavor to coerce the making of a sale by your orator at a 
price below what was fair. An offer was then made by your orator to 
Carnegie that in case a fair price could not be agreed upon for his interest, 
which the latter insisted upon securing, that your orator would agree to 
refer to the arbitration of three disinterested men, the determination and 
fixing of a fair value. This offer Carnegie refused, doubtless because he 
hoped to acquire such interest at much less than the fair value thereof by 
means of his fraudulent scheme hereinbefore set out, which scheme he was 
then, though without any intimation of that fact to your orator, secretly 
perfecting and determined to carry into effect. 

Your orator still is willing, in order that harmony may be preserved 
and that the great interests involved may not be subjected to jeopardy, to 
sell his interest in the Carnegie Steel Company, Limited, at a fair value, to 



368 APPENDIX 

be ascertained by three disinterested business men. He now tenders his 
willingness so to do. 

Notwithstanding the fraudulent actions of Carnegie, your orator also is 
wiUing, in order that the enormous business interests of the Carnegie Steel 
Company, Limited, may be protected, without injury to any of its partners, 
to continue the business of the said firm in accordance with the true spirit 
of the articles of agreement of July ist, 1892, creating the same. 

If, as your orator is advised and believes, the said articles created a 
general, and not a hmited, partnership, he is willing, and now tenders such 
willingness, to have such action taken by the firm and by the partners 
thereof as will make the said firm strictly a Hmited partnership, as origi- 
nally intended. Your orator is further willing, and now tenders such 
wilHngness, to continue the Carnegie Steel Company, Limited, as a general 
partnership, if he is allowed, as one of the partners, to participate in the 
management thereof, claiming no other or further right than that of a 
general partner in a general partnership. 

Your orator is not willing, however, to continue the general partnership 
under the sole control of Carnegie, without being allowed to have any par- 
ticipation therein^ Carnegie is so engaged in other occupations and diver- 
sions that, were he otherwise able so to do, he cannot properly manage 
and carry on said business. Your orator believes and avers that the 
financial prosperity of the firm will be impaired by the exclusive manage- 
ment and control of the same by Carnegie. 

All of the defendants excepting Henry Phipps, F. T. F. Lovejoy and 
Henry M. Curry, and possibly others, at the instance of Carnegie, now 
claim that your orator has no interest in the Carnegie Steel Company, 
Limited, and that his only right is to demand from said company, at long 
postponed periods, such amount in compensation as Carnegie shall be 
willing to concede him. 

Your orator thus by the fraudulent acts of Carnegie and the acqui- 
escence therein of the defendants, other than those above named, has been 
ejected from the Carnegie Steel Company, Limited, and has been and is 
now denied any participation in its business. Your orator's interest therein 
has been taken possession of by the defendants, and they at the instance and 
under the domination of Carnegie, are now carrying on the said business, 
alleging that they will continue to carry it on as if your orator had no in- 
terest therein. 

Your orator alleges that the whole effort which has been made, and 
which the defendants are now seeking to make effectual, is in pursuance of 
said fraudulent scheme of Carnegie to practically seize your orator's interest 
in said firm. This attempt is being made, although Carnegie knows, and 
all the defendants know, that the prosperity of the firm, in considerable 
part, is the result of your orator's continuous and close personal manage- 
ment of the same, from the time of its organization. 

Your orator denies that there is or was when said notice was given any 
contract under which the defendants have acquired, or lawfully can acquire, 
his interest in said firm. 

He avers that the attempt to acquire the same and said pretended 
transfer thereof by said Schwab, are illegal and void. Schwab was not the 
attorney in fact of your orator to make said transfer nor did he have any 
lawful authority so to do. 

Wherefore your orator needs equitable rehef, and prays as follows : 

First. A decree that the pretended transfer of your orator's interests 
in the Carnegie Steel Company, Limited, was and is null and void. . . . 

Second. An injunction, now special, hereafter to be made final, re- 



THE EQUITY SUIT 369 

straining the defendants from any interference with your orator's interest 
in said Carnegie Steel Company, Limited, and from excluding him from 
a participation in the care and management of the assets and business. 

Third. An injunction, special until hearing, and perpetual thereafter, 
enjoining and restraining the defendants from conducting the business 
operations of the firm called the Carnegie Steel Company, Limited, without 
permitting your orator to participate therein. 

Fourth. An injunction, special until hearing, and perpetual thereafter, 
enjoining and restraining the defendants from tranferring to the Carnegie 
Steel Company, Limited, or to any person or persons, or corporation, your 
orator's interest in the said Carnegie Steel Company, Limited. 

Fifth. A decree ordering the defendants to cancel upon the books of 
the said firm, any assignment or transfer heretofore made, or pretended to 
be made, to said association, of your orator's interest in said firm, and all fur- 
ther assignments, if any, to any other persons, of your orator's said interests. 

Sixth. A decree ordering the defendants to join with your orator in 
conducting and managing the affairs and business and properties of the 
Carnegie Steel Company, Limited. 

Seventh. A decree ordering the defendants to cancel and erase all 
entries upon the books of the firm of the Carnegie Steel Company, Limited, 
of insufiicient, unfair, and improper valuations of its assets and of your 
orator's interest therein, and to cause the said books so to be kept as to 
fairly and fully show the real value of the Carnegie Steel Company, Limited, 
as a going concern and your orator's interest therein. 

Fighth. In case the defendants shall refuse the offers hereinbefore 
by your orator made, . . . that your Honorable Court will thereupon 
allow your orator to declare the said firm of the Carnegie Steel Company, 
Limited, dissolved, and that you will thereupon appoint a receiver to take 
charge of all the business and assets of the said firm, permitting said 
receiver to fulfil unperformed contracts and to do whatever shall be 
necessary in and about the proper liquidation of its affairs, and that, after the 
conversion of the entire assets of the company into money and the payment 
of the debts of the said company, your Honorable Court will then distribute 
the balance thereof among the partners in proportion to their interests. 

N'iiith. That an account l3e taken between Carnegie and your orator, 
whereby Carnegie shall be charged with all the losses, expenses, and dam- 
age he has caused your orator by his illegal and fraudulent conduct 
hereinbefore stated ; and that if Carnegie persists in his said fraudulent 
scheme and refuses the offers hereinbefore made, and thus causes the 
actual dissolution of the firm, all losses incurred by your orator by reason 
of the said dissolution and forced winding up of the firm shall be charged 
against him, and that he shall be decreed to make good and pay to your 
orator the difference between what his interest was fairly worth on or 
about February ist, 1900, and the amount he shall receive through the 
decree of this court in final liquidation and settlement of the said firm. 

Tenth. That all entries Carnegie or any other person has caused to 
be made on the books of the Carnegie Steel Company, Limited, in pursu- 
ance of said fraudulent scheme of said Carnegie, shall be erased and 
cancelled under the decree of this Honorable Court. 

Eleventh. General relief. 

John G. Johnson, 
D. D. Watson, 
Willis F. McCook, 

Solicitors for Plaintiff. 



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